Advertisement
Canada markets open in 2 hours 57 minutes
  • S&P/TSX

    21,837.18
    -12.02 (-0.06%)
     
  • S&P 500

    5,149.42
    +32.33 (+0.63%)
     
  • DOW

    38,790.43
    +75.63 (+0.20%)
     
  • CAD/USD

    0.7368
    -0.0021 (-0.29%)
     
  • CRUDE OIL

    82.52
    -0.20 (-0.24%)
     
  • Bitcoin CAD

    85,663.52
    -6,571.13 (-7.12%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,159.00
    -5.30 (-0.24%)
     
  • RUSSELL 2000

    2,024.74
    -14.58 (-0.72%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • NASDAQ futures

    18,187.75
    -43.75 (-0.24%)
     
  • VOLATILITY

    14.60
    +0.27 (+1.88%)
     
  • FTSE

    7,719.00
    -3.55 (-0.05%)
     
  • NIKKEI 225

    40,003.60
    +263.20 (+0.66%)
     
  • CAD/EUR

    0.6793
    +0.0001 (+0.01%)
     

Rising rent prices in Canada remain tough to clearly track

Rising rent prices in Canada remain tough to clearly track

Vancouver rents increased 15 per cent from April to August and are on track to grow by 20 per cent this year if they keep up the pace, according to rental data collected from Craigslist by UBC economist Tom Davidoff.

“On an annualized basis, I’m finding rents are going up since March,” the economist told Metro. But the findings, which include both one bedroom and two bedroom apartments, are at odds with data from PadMapper – a rental site that aggregates listings from a wider net including Craigslist, ViewIt and Kijiji.

According to PadMapper the average rent for a one bedroom in Vancouver stayed around $1,700 between mid-May and mid-August with a small uptick to $1,740 in between before settling back at $1,700. The average price of a two bedroom actually fell from $1,780 to $1,720 during that same period.

So why the discrepancy? One reason is the lack of cohesive data. While the Canadian Mortgage and Housing Corporation issues that monthly roller coaster ride that is the country’s housing reports, their approach to rent is sparse with a yearly report going out in the fall. And that data only accounts for units that were there the previous year, not new ones.

ADVERTISEMENT

“When they build new units they tend to be high rental units and that can skew the rent increase,” explains Bob Dugan, chief economist at the CMHC. According to the CMHC’s rental report for Oct. 2014 to Oct. 2015, rent in two bedroom apartments increased by a more modest 4.4 per cent. But that doesn’t mean Davidoff’s observation of ballooning rent in Vancouver is off-base.

“(In B.C. and Ontario) we’re seeing fairly strong economic conditions, a low Canadian dollar… employment growth, migration to these places,” he says. “So that puts extra demand on both ownership and rental housing.”

The past year and a half have seen Vancouver ramp up efforts to grapple with its housing affordability crisis. Just last week B.C. implemented its new 15 per cent foreign buyer tax. But what about renters?

“People who immigrate to Canada have a higher propensity to rent than other Canadians – that can put upward pressure on prices,” he says. Another key driver of rising rents in urban spaces is the growth in condos being built.

“Most of the supply of new rentals comes through the condo market,” says Dugan pointing out that rent in Vancouver condos is more expensive usually as a result of amenities with the average in Oct. 2015 sitting at $1,543 versus purpose built rentals at $1,368. In Toronto, the discrepancy is higher with condos renting on average for $1,754 versus $1,288 for purpose built rentals.

Both Ontario and B.C. have measures in place to control rent, with Ontario having sent rent increases for 2016 at 2 per cent and B.C. tempering rent increases for this year at 2.9 per cent.

“The way it’s set up is if you stay in your apartment there’s limitations on rent increases but when an apartment turns over and someone new move in landlords do have the opportunity at that point to reset rents to market levels,” says Dugan. Upgrades made to a building can also be passed on to tenants.

“Those kinds of renovations to modernize a building can certainly have an impact on rent increases,” says Dugan.

A recent column in Metro by East Vancouverite Trish Kelly pointed to a new scheme by landlords to get around the Residential Tenancy Act’s (the RTA) annual 2.9 per cent rent hike cap. Apparently, tenants are asked to sign fixed term leases with an agreement move out at the end of the lease.

“When the agreement expires, tenants are offered a new lease, at a much higher rent as much as 10 times the allowable 2.9 per cent,” she writes.

Kelly likens the unaffordability to the same conditions that prompted renters in major urban centres like London and New York to band together in renters unions and stop paying rent hikes until the situation improved.

“It’s hard to make it an effective protest if you’re one tenant with an individual landlord, but if a whole building of renters on fixed term leases united and said no to a rent hike?” she writes. “Maybe that would make opportunistic landlords think twice. Maybe that would force our provincial government to prick up their ears.”