Rents have dropped for the first time in three years across Canada, according to the latest National Rent Report from Rentals.ca.
The average rent across all residential property types has fallen 1.2 per cent every year to $2,152, for its first year-over-year decline since July 2021, the height of the COVID-19 pandemic, according to the report.
The biggest declines in rent took place in Ontario and British Columbia. In Ontario, average rent was down 5.7 per cent from a year ago, at $2,350. British Columbia had a more modest decline, 3.4 per cent, to an average of $2,549.
But housing supply remains an issue even though Toronto announced the opening of 26 affordable and accessible homes after 685 Queen Street East's redevelopment on Nov. 22.
Cities like Vancouver and Toronto are still expensive, but the rents have come down significantly.
Vancouver remains the most expensive city. However, one-bedroom and two-bedroom rents have dropped 9.1 per cent and 9.2 per cent, respectively, compared to last year.
One-bedroom units in Toronto also fell to 8.7 per cent, while two-bedroom units fell to 9.7 per cent.
Other cities, however, have also seen significant rent drops in the last year, including Burnaby, Mississauga, and Oakville.
Tsuriel Somerville, associate professor at Sauder School of Business at UBC and a housing market expert, said a major reason for the decrease in rent is that rising costs led to a drop in demand.
"People respond to the increase in rents by reducing their demand. You do have a response. People live at home longer or double up," he said.
Somerville said an increase in rental construction has helped stabilize prices.
"You had a lot of incentives to encourage rental housing going back to, say, the end of the last decade. I think you see a little bit of a play out of that as more of that rental product is completed," he said.
Jason Mercer, Toronto Regional Real Estate Board’s chief market analyst, said GTA’s rental market has been more balanced over the past year.
He said this has led to improved affordability.
“Interest rates have trended lower this year, with more Bank of Canada cuts yet to come. More affordable mortgage payments could prompt some renters to move into homeownership. This could lead to a further increase in rental inventory in the months ahead,” Mercer said.
Somerville said the decline in international students is impacting rental demand.
"The decline in the international student numbers would be a reduction in demand,” he said. “We certainly see it in universities where already this year the number of acceptances and enrolments are down compared to where they were in a number of years."
Most provinces saw a decline, but some, including Alberta, Manitoba, and Atlantic Canada, saw minor increases in rent pricing. They continue to be more reasonable than their larger city counterparts in Ontario and B.C.
By type of property, purpose-built apartments recorded a more modest annual growth of 1.7 per cent to an average of $2,100, while condo rents declined 3.8 per cent to $2,265.
Nationwide, cities such as Edmonton and Calgary and other places in Quebec and Saskatchewan remained the country's most affordable places to rent.
Although many cities have seen cuts in rent prices, other cities have experienced rent increases, particularly in those markets where overall rents are lower. Saskatchewan had the highest rent increase across the country at 17.1 per cent growth.
Listings in the shared accommodation rental market are up 58 per cent year-over-year, while demand in the rental market grows stronger for more affordable housing options.
With ever-changing rental prices, an increasing number of Canadians are choosing shared accommodations, reflecting the trend for more affordable living.
