MONTREAL ― Many of Canada’s mid-sized cities caught the soaring rental rates bug in January, even as rent hikes cooled off in the largest metro areas, new data from rental site Padmapper shows.
Statistics Canada’s data shows wages were 3.8 per cent higher, on average, in January of this year than a year earlier ― quite a strong showing for this day and age. But rent inflation outstripped that in 14 of 24 cities covered by Padmapper, in some cases tripling or nearly quadrupling wage growth.
One-bedroom rental rates have risen by about 15 per cent over the past year in a number of Ontario cities, including Ottawa, the Kitchener-Waterloo area, Kingston and London. St. Catharines and Windsor have both seen rental rates rise by more than 10 per cent.
Other cities that saw major rent hikes included Halifax, Saskatoon and Victoria.
The numbers suggest “a hot market that will most likely continue to grow as we enter into the spring months,” Padmapper said in a report issued Monday.
Watch: HuffPost Canada business editor Daniel Tencer on why rents are rising so quickly, and what can be done about it. Story continues below.
After several years of strong growth, rental rates in Canada’s largest cities are taking a breather. One-bedrooms in Toronto were flat in January, with two-bedrooms up 4.6 per cent.
Amid a bumpy real estate correction in Vancouver, one-bedrooms rose 3.4 per cent while two-bedrooms dropped 8.8 per cent. One-bedroom rents were flat in Montreal, while two-bedroom rents rose 7.3 per cent.
Many experts say Canada saw a jump in demand for rental housing when new policies were put into place to cool off house price growth, and when interest rates rose in 2017 and 2018. Many homebuyers were forced to save more for a down payment, keeping them in rental housing longer.
Additionally, faster population growth ― thanks to increased immigration levels ― has led to rental housing shortages, sometimes in unexpected places like Prince Edward Island.
Others note that Canada has built relatively little new rental housing supply in recent decades, with developers focused on more profitable condo projects. The country largely stopped subsidizing rental construction in the 1980s.
But with rental rates on the rise, developers are jumping back into apartment construction. The number of rental units under construction in Canada hit 72,000 in the fall of 2019, double the amount from five years earlier.
Click here for the full list of rental rates from Padmapper.