Average rents in Canada soar above $2K for first time ever, new data suggests

The average monthly cost of renting a home in Canada surpassed $2,000 for the first time ever in November, according to a report released Wednesday.

The data shows that Canadian renters are dishing out an average of $2,024 every month to keep a roof over their heads. The figure covers all types of housing from bachelor apartments to detached homes.

That's up 12.4 per cent over last November, far outpacing Canada's inflation rate of 6.9 per cent.

The new report was published by the rental search site Rentals.ca and Urbanation, a real estate research firm. It relies on data compiled from Rentals.ca's internal listings service and highlights that the price of renting is surging in almost every market in the country.

The costs of one and two bedroom units were highest in Vancouver at $2,633 per month and $3,598 per month, respectively.

Toronto had the second-highest rents. The average price of a one-bedroom apartment in the city has jumped 23 per cent since the same time last year, standing at $2,532 monthly. A two-bedroom apartment will cost you an average of $3,347 per month, the report found.

Other cities in the Greater Toronto Area saw major increases in rent as well. Costs in Brampton climbed 28 per cent year over year, while Mississauga saw a 19.2 per cent jump. Smaller markets west of the GTA also got more expensive, with monthly rents rising 27.9 per cent in London and 24 per cent in Kitchener.

Of the 20 Canadian cities with the most expensive average rents all but one — Halifax — were in B.C. and Ontario. The biggest year-over-year increase for a single bedroom unit was seen in Burnaby, B.C., where renters paid a stark 32 per cent more last month than they did in November 2021.

WATCH | Average rents skyrocket across Canada: 

Increases in rental costs show no signs of slowing down, the report noted. Year-over-year jumps have been in the double digits since May, with November's being the highest yet.

"Rents in Canada are rising at an exceptionally high speed, which is having a profound effect on housing affordability as interest rates continue to rise," said Shaun Hildebrand, president of Urbanation, in a news release on the findings.

"With the most expensive cities experiencing very low supply and the fastest rates of rent increase, regions with high population growth are seeing demand shift into more affordable areas."

When it comes to purpose-built rental apartments and condos only, Atlantic Canada actually saw the fastest annual rate of increases in rental costs with a combined 31.8 per cent growth year over year for Nova Scotia, Newfoundland and Labrador, New Brunswick and P.E.I.

One-bedroom units in Atlantic Canada averaged $1,716 per month in November, while two-bedroom units cost an average of $2,032, according to the report.

Conversely, Montreal — Canada's single largest rental market, according to the report — saw the slowest growth in rent increases at just 7.6 per cent.

WATCH | Why rent is getting so expensive across Canada:

Skyrocketing rental costs come as higher interest rates have cooled housing markets throughout the country. Normally a slowing real estate market would be good news for renters since landlords may be eager to find reliable tenants — but the issue boils down to supply and demand.

"Interest rates are actually working to elevate rent inflation because many people are not buying, so they are renting more," CIBC economist Benjamin Tal told CBC News last month.

Compounding the problem is that the high costs of borrowing means builders are cancelling developments and investors are hesitant to pour money into future real estate projects.

"Higher interest rates reduce the incentive to invest in real estate, especially in the condo space," Tal said. "So if you don't have those units, that's another factor driving up the cost of renting what's left."

Rents 'simply becoming unaffordable'

"We're getting close to that point where rents are just simply becoming unaffordable for renters," Hildebrand said in an interview with CBC News.

"It sounds like we could enter into an economic slowdown next year. So in that sense, it's likely that we could see rents take a bit of a breather in 2023," the Urbanation president said.

"But over the medium and longer term with aggressive immigration targets and rental construction that's been stalling recently due to high costs, it's pretty clear that rents are going to continue to rise higher."

Hildebrand recommends that renters look for new options in the winter.

"There's less competition among other renters out there and you usually see that landlords are a little bit more flexible on rent," he said.

While he says not much can be done in the short term, Hildebrand says governments could get more supply into the system by introducing incentives to build purpose built units and make new rental projects more economically feasible.

'There are solutions,' advocate says 

Paul Danison, content director for Rentals.ca, says governments have to get more creative with zoning.

"Because of COVID-19, the pandemic, a lot of office space is empty," he told CBC News.

"People could be turning those into lofts where you have work, eat, live, shop kind of destinations where people could live."

He cites inclusionary zoning, laneway suites and infill type development as other possible options.

"There are solutions, governments just are not reacting quickly enough on this."