Canada's rent averages are showing a rare dip, but the housing crisis remains as pressing as ever. According to the Rentals.ca National Rent Report, the national average rent fell to $2,139 in November, a 15-month low and a 1.6 per cent annual decline, which followed a 1.2 per cent decrease in October.
While some see this as a glimmer of hope, housing is still painfully expensive for most renters including students, newcomers, and young professionals.
As we approach 2024, the Bank of Canada is signalling a potential drop in the prime lending rate. Some may hope this will relieve the housing market, but the reality is far more complex.
Falling interest rates could ignite new demand, fuelling bidding wars, and driving housing prices and rents back up. This could make an already precarious situation worse for renters.
The recent decline in rents doesn’t mean affordability is within reach. Average rents are still 6.7 per cent higher than two years ago and a staggering 18.8 per cent higher than three years ago.
In cities like Toronto, one-bedroom apartments remain above $2,300 on average. Vancouver tells a similar story, with one-bedroom units priced at $2,534 despite an 11.6 per cent annual decrease.
Even smaller cities, often considered affordable alternatives, are seeing troubling trends.
In Halifax, rents for two-bedroom apartments have risen 6.7 per cent year-over-year to $2,466, while Waterloo saw a shocking 26.1 per cent jump for one-bedroom units, averaging $2,048.
For international students and low-income renters, these numbers are daunting.
A drop in the prime lending rate is designed to ease the financial strain for borrowers, but it can also unleash unintended consequences.
Investors and potential homeowners rush back into the market when borrowing becomes cheaper, reigniting competition. Property prices climb, and landlords often pass on higher costs to tenants, driving up rents.
This effect is magnified by Canada’s housing shortage. The country welcomed more than 400,000 newcomers in 2023, yet housing construction hasn’t kept pace.
The imbalance between demand and supply is the core issue and lower interest rates won’t fix it.
Policymakers must prioritize long-term solutions to Canada’s housing crisis. The federal government’s Housing Accelerator Fund, aimed at speeding up housing development, is a step in the right direction.
However, municipalities need to follow suit by reforming zoning laws to allow more high-density housing and reducing bureaucratic delays for new projects.
Stronger renter protections are also essential. Enforcing limits on rent increases and addressing discriminatory practices can provide immediate relief.
Expanding affordable housing programs, particularly for students and low-income families, should be a priority.
Universities and colleges, too, must play a role. Institutions benefiting from international students’ high tuition fees should invest in affordable on-campus housing to ease the burden on their students.
For renters, the stakes couldn’t be higher. Without bold action, falling interest rates may benefit a select few while leaving the rest of us scrambling to keep a roof over our heads.
As Canada heads into 2024, it’s time for policymakers at every level to step up.
Temporary dips in rents aren’t enough to address the deep-rooted issues plaguing the housing market. Without urgent, coordinated action, the rental crisis will continue to overshadow any short-lived reprieve.
