Rental Prices Are Increasing

The impact of inflation can be seen in the rising gas prices, increasing price of consumable commodities, and housing prices as well. Because the overall house prices are increasing, rental prices of houses are increasing as well. However, experts have pointed out that the current increases in rent are not as high as they were in pre-pandemic levels.

According to the latest National Rent Report, Toronto was ranked the second most expensive city in Canada to rent a home out of 25 cities. The average monthly rent calculated was nearly $2,044 for one-bedroom, and the average two-bedroom costing $2,778. The data on the average rent price of houses was gathered on national, provincial and municipal levels and was analyzed through the listings provided on a popular Canadian rental website.

It is important to consider that during the onset of the pandemic, the increase in rental prices was due to lower immigration levels, education institutions switching to online learning, and the supply of Airbnb units increasing as well. As per the current situation, Covid restrictions are being alleviated and tourism in Canada is resuming as well, this has resulted in the rental prices being increased further.

One of the reasons why the rental price of houses are increasing is the increasing demand for single-family home rentals and there are already renters who have a desire to become home owners. Because of the current housing market, such people are not able to become home-buyers resulting in them temporarily renting a home. Moreover, the rental price has increased for different types of homes, however, single-family homes are high in demand. Because the supply of new homes is short, current homeowners have increased their monthly rents to capitalize on market demands.

The authors of National Rent Report said that rents could “continue to push higher in the near future because of increasing demand and reinforced by supply chain disruptions, record inflation, increasing interest rates and much higher gas prices.”. The president of Bullpen Research and Consulting, Ben Myers also revealed that the rental market in Canada “continues to trend upward in the post-vaccine pandemic period, with continued strength in the market for larger suites.”. “Growth in average rents for one-bedroom units lags other bedroom types, with two-, three-, and four-bedroom units exceeding February 2020 pre-Covid-19 levels last month,”.

According to a new study by ComparetheMarket, the company revealed that renting a three-bedroom apartment is now nearly 32% cheaper than buying a comparable property. This is one of the largest gaps in the world, ranking Canada at number 10. There are few other European countries that rank higher than Canada, where renting a property can be 40% cheaper than purchasing a comparable property

Considering the increase in rental prices, the debate of renting vs buying has had a narrative change, where in the past, renting a property was considered a poor financial decision, this is no longer the case. Financial commentator, Patricia Lovett-Reid said, “Renting doesn’t always mean you’re just throwing money away and just making your landlord richer. It’s a decent strategy to take that money and invest it in the market. You can be renting and still have wealth creation… Particularly if you’re young.”