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Rental supply increases but demand surges

January 26, 2023

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A glance at trends from the 2022 report

  • Rental housing supply surged but demand outpaced growth — leaving the national vacancy rate at a near-historic low.
  • New data shows that average rent growth for 2-bedroom units was significantly higher for units that turned over to a new tenant than the ones that didn’t.
  • The average rent for a 2-bedroom apartment reached an all-time high.
  • Low rental housing stock disproportionately impacted low-income renters.
  • Rental condo market supply increased but conditions remain tight.

Our 2022 Rental Market Report gives you a comprehensive look at Canada’s rental housing market. It provides an in-depth analysis of rents, vacancy rates and affordability, using data from our latest Rental Market and Condominium Apartment surveys.

Purpose built rental market
(In Canadian centres
with population 10,000+)

Vacancy rate
 
2022: 1.9%
2021: 3.1%

Average 2‑bedroom rent
2022: $1,258
2021: $1,167
Up by 5.6%

Rental condominium apartment market
(In the major census
metropolitan areas surveyed)

Vacancy rate
 
2022: 1.6%
2021: 1.8%

Average 2‑bedroom rent
2022: $1,930
2021: $1,771
Up by 9%

Download the Rental Market Report

The national vacancy rate was at a near-historic low as rental housing demand surged

Rental supply increased by about 55,000 purpose-built rental apartment units (+2.6%) between October 2021 and October 2022. This is the strongest rate of increase since 2013.

Rental demand outpaced growth with the number of occupied units increasing by about 79,000 units (+3.8%).

The demand for rental housing was higher than the strong supply growth, leading to the lowest national vacancy rate since 2001. The national vacancy rate for purpose-built rental apartments dropped from 3.1% in 2021 to 1.9% in 2022.

Several factors led to the increase in rental housing demand. These include:

  • higher immigration and net migration
  • more expensive homeownership
  • students returning to on-campus learning in several census metropolitan areas

New data reveal the impact of turnover on the average rent

Our 2022 report introduces a new data point:

The effects of turnovers on average rent. A turnover is when a current tenant leaves at the end of their contract period and the landlord rents the property to a new tenant.

The data show that the average rent increase for 2-bedroom units that turned over to a new tenant was well-above increases of units that did not change tenants (18.3% compared to 2.9%).

Landlords often increase rent to current market levels when a tenant leaves a unit. Some landlords upgrade units between tenants so they can charge higher rents to new tenants.

These higher rents increased affordability challenges for renters who are trying to enter the market or find new housing.

Our analysis also reveals that turnover rates decreased to 13.6% in 2022, from 15.5% in 2021. This indicates that households are staying in their homes — contributing to lower overall vacancy rates.

Average rent for 2-bedroom units reaches new high

The average rent growth for 2-bedroom purpose-built apartments surveyed jumped to 5.6% in 2022, up from 3% in 2021. This is a new annual high and is well above the 1990 to 2022 average of 2.8%.

Vancouver (at $2,002) and Toronto (at $1,779) remain the markets with the highest average rents in Canada, well above the national average of $1,258.

Low-income renters impacted as affordable rental stock remains low

Lower-income renters continued to face affordability challenges because the share of affordable rental units remained limited.

For the bottom 20% of income-earners in most rental markets, the affordable share of the rental market is much less than 20% of the stock of market rental units.

Québec centres, such as Montréal, have a higher share of their rental market affordable to the bottom 20% of income-earners. Reasons for this include a larger rental stock, older and smaller structures and possibly more individual owner-landlords than in other centres.

Rental condo market supply grows but conditions remain tight

In 2022, rental condominiums made up 19.3% of the total stock of rental units across centres:

  • Vancouver was the leader, with 42.5% of its rental stock being condominiums.
  • Calgary (37.5%) and Toronto (34%) also have high numbers of condos as their rental housing stock.
  • Centres in Québec reported smaller shares, including Montréal at 6.7%.

While the overall rental condo supply increased by 7.2% in 2022, the average vacancy rate for these units remained low at 1.6%.

The average rent for a 2-bedroom rental condominium apartment saw a significant increase to $1,930 from $1,771, at about 9% year-over-year.

Find highlights for Canada's largest centres below. Other census metropolitan areas are detailed in the Rental Market Report.

Vancouver

Purpose built rental market
(In Canadian centres
with population 10,000+)

Vacancy rate
 
0.92%

Average 2‑bedroom rent
$2,002
Up by 5.7%

Condominium apartment market
(In 19 Canadian
centres surveyed)

Vacancy rate
 
2.2%

Average 2‑bedroom rent
$2,504
 

  • High demand for a limited supply of rental units resulted in lower vacancy rates, rising rents and growing inequality between long-term leaseholders and newcomers.
  • The vacancy rate decreased from 1.2% in 2021 to 0.9% in 2022. Higher homeownership costs and migration to the region led rental demand to increase faster than supply.
  • Asking rents for vacant units are 43% higher on average than those paid for occupied units, resulting in lower unit turnover (10.7%).
  • Important imbalances remain in the Vancouver rental market. Our data show that lower-income households face significant challenges in finding housing that they can afford.
  • The purpose-built rental universe increased by a record 3,805 units (+3.3%) following the increased construction of new units in recent years.
  • The number of condominium apartments in long-term rental increased by 9.8% (7,850 units). The increase in supply contributed to the condominium segment having a higher vacancy rate (2.2%) than the purpose-built rental segment (0.9%).

Edmonton

Purpose built rental market
(In Canadian centres
with population 10,000+)

Vacancy rate
 
4.3%

Average 2‑bedroom rent
$1,304
Up by 1.6%

Condominium apartment market
(In 19 Canadian
centres surveyed)

Vacancy rate
 
4.1%

Average 2‑bedroom rent
$1,426
 

  • Strong economic recovery and record migration contributed to rental demand outpacing new rental housing supply in 2022.
  • Quarterly net-international migration set a record in the second quarter of 2022 with almost half of migrants being non-permanent residents. This is largely because of student demand. More people also moved to Edmonton from other parts of the country at levels not seen since 2012 – 13.
  • As of October 2022, total employment was up 3% year-over-year and 5% above pre-pandemic levels. Full-time employment among people aged 15 to 24 years, a group which tends to rent, was up 18%.
  • The purpose-built rental apartment vacancy rate was 4.3% in October 2022, down from 7.3% in October 2021.
  • There was strong growth in the purpose-built rental universe at a rate higher than in any previous decade based on data going back to 1990.
  • Same-sample apartment rents increased by 1.6% in 2022. Lower vacancies, especially in some sub-areas of the census metropolitan area, placed upward pressure on rent levels.

Calgary

Purpose built rental market
(In Canadian centres
with population 10,000+)

Vacancy rate
 
2.7%

Average 2‑bedroom rent
$1,466
Up by 6.6%

Condominium apartment market
(In 19 Canadian
centres surveyed)

Vacancy rate
 
1.8%

Average 2‑bedroom rent
$1,648
 

  • With Calgary’s economy rebounding beyond pre-pandemic levels, the rental market tightened to conditions not seen since Alberta’s last economic boom.
  • The overall vacancy rate dropped to 2.7% from 5.1% in 2021, the lowest since 2014. Record migration into Alberta largely supported this demand, while increases in supply were not enough to balance out this demand.
  • Despite rental supply adding 3,352 units, or an 8% increase, the market tightened. New buildings were completed near the city core and the eastern areas.
  • There is not enough rental stock that is affordable to the lowest-income households. Only about 5% of the purpose-built rental housing stock is considered affordable to households earning less than $36,000. Most of the units affordable at this level are bachelor or 1-bedroom units, which are unsuitable for larger households.

Greater Toronto Area

Purpose built rental market
(In Canadian centres
with population 10,000+)

Vacancy rate
 
1.7%

Average 2‑bedroom rent
$1,765
Up by 6.5%

Condominium apartment market
(In 19 Canadian
centres surveyed)

Vacancy rate
 
1.1%

Average 2‑bedroom rent
$2,671
 

  • Recovery in the labour market brought vacancy rates back to pre-pandemic levels.
  • The primary rental apartment vacancy rate fell to 1.7% in 2022, from 4.4% in 2021. This was a level more consistent with the 10-year pre-pandemic (2010 – 2019) average of 1.5%. Fewer disruptions to economic activity and immigration in 2022 resulted in a surge in rental demand.
  • The primary rental apartment stock increased by 2.1%, or 7,175 units, in 2022 from the previous year. This was the highest increase in recent decades.
  • While rental supply increased, it could not offset demand. Access to affordable rental housing remains a challenge for low-to-middle-income renter households.
  • Increased competition for fewer units led to strong primary market rent growth in 2022. The average rent for a 2-bedroom apartment increased by 6.5%.
  • For units that turned over to a new tenant, the change in the average 2-bedroom apartment rent was markedly higher, at 29%. Rapidly rising rents contribute to affordability pressures, especially for households looking for new rental housing.

Ottawa

Purpose built rental market
(In Canadian centres
with population 10,000+)

Vacancy rate
 
2.1%

Average 2‑bedroom rent
$1,625
Up by 4.8%

Condominium apartment market
(In 19 Canadian
centres surveyed)

Vacancy rate
 
0.5%

Average 2‑bedroom rent
$2,075
 

  • Strong demographic and economic conditions led to rental demand. Because of this, the vacancy rate dropped from 3.4% in 2021 to 2.1% in 2022. The greatest declines were in central neighbourhoods, partly because of the return of students.
  • The average rent for 2-bedroom apartments increased by 4.8% from 2021. A significant difference can also be observed between units that did not change tenants ($1,520 on average) versus units that changed tenants ($1,831).
  • The turnover rate decreased from 2021 to 2022, from 22.8% to 16.8%, down from the peak of the pandemic in 2020 (17.9%).

Montréal

Purpose built rental market
(In Canadian centres
with population 10,000+)

Vacancy rate
 
2%

Average 2‑bedroom rent
$1,022
Up by 5.4%

Condominium apartment market
(In 19 Canadian
centres surveyed)

Vacancy rate
 
2%

Average 2‑bedroom rent
$1,517
 

  • Strong demand in the rental market pushed the vacancy rate down from 3.7% in 2021 to 2.3% in 2022.
  • Rent increases were also significant, especially for renters who moved. For 2-bedroom apartments, there was a 28% difference between the average rent for new tenants ($1,235) and the average rent for existing tenants ($963).
  • The change in average rent between 2021 and 2022 for 2-bedroom apartments was 14.5% for units with new tenants and 3.5% for units with the same tenants.
  • The supply of affordable housing remains an issue in greater Montréal despite the sustained construction of rental apartments. This is reflected in the vacancy rate of only 1% for apartments considered affordable for households with incomes under $43,000.

Related links:

  • Rental Market Report Data
  • Percentile and Pooled Rents Data
  • Housing Research Newsletter
  • Housing Market Information Portal

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Discover related content using the tags below:

  • Purpose-Built Rental
  • Average Rents
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  • Rental Market Statistics
  • Housing Affordability
Date Published: January 26, 2023

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