Unprecedented rent growth in Canada: Reasons and How to Cope with It?

Date:

Guest Post | Jan 6, 2023

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What’s Behind the Unprecedented Rent Rise in Canada, and How Can You Deal With It?

According to Statistics Canada, national average rents increased by 11.8% annually in October 2022, more than double the annual growth in employee hourly pay, which was 5.6%. Rent in Canada has increased by 11.8%, or around $209 per month, increasing the average cost of all property types to $1,976.

Across Canada, rents are rising at an unprecedented rate, with most cities reporting double-digit annual rent inflation. With each increase in interest rates and an unprecedented rise in the population, the rental market continues to heat up. There has never been a more pressing need to increase the rental stock.

Why are Canadian Rental Prices Soaring?

Increased Value of Real Estate

Generally speaking, the price of rent and the worth of the rental property are inversely proportional. A greater monthly rent is often associated with more costly buildings.

In comparison to the previous year, the value of both commercial and residential assets has grown and this results in some Canadians being forced to take out online loans in Ontario due to lack of money. Property prices remain high despite the recent market drop that was seen in September. This would imply that landlords of apartments are passing along to their renters the increasing costs of their mortgage interest.

Rising Interest Rates Have Kept Canadians In the Rental Market

The benchmark interest rate in the nation increased to 2.5 percent on Wednesday as a result of the Bank of Canada’s decision to increase its policy rate by a full percentage point, up from only 0.25 percent at the beginning of the year.

Higher central bank interest rates result in higher mortgage payments and make it more difficult for certain potential purchasers to get loans.

In the meanwhile, prices in the rental market have increased as a result of increasing interest rates and a slowdown in the real estate market. According to Rentals.ca, the national average rent in Canada increased to $1,976 per month in June, an 11.8% yearly rise.

Average rental cost in Canada over time - Unprecedented rent growth in Canada: Reasons and How to Cope with It?

The rental market is left to support an expanding number of individuals as ownership becomes more and more out of reach for Canadians. People are less likely to leave the rental market and purchase their first house or remain on the sidelines when loan rates rise, which is one of the contributing factors.

Inflation

The burden on Canadians’ wallets has increased in light of recent yearly inflation rates. It’s no secret that inflation has given Canadians a lot of trouble. The cost of almost everything has increased. For the typical Canadian, it is now more expensive to buy groceries, clothes, cars, fuel, and other things. Unfortunately, rising rental costs appear to be the norm and the cost of rent has increased by as much as 20% in certain areas.

Renting an Apartment or Home

There are various options available to you if you’re wondering how to rent a home or an apartment in Canada, including Kijiji, Craigslist, local newspapers, community bulletin boards, social media groups, and even word-of-mouth.

But most of the time, tenants locate their new residences online. With that stated, it is important to use caution online as many fraudsters like to operate via classified websites. Always keep in mind that if anything seems too good to be true, it generally is.

Because no long-term commitment and long-term renting are often less expensive than purchasing a home, it might be a wise choice for newcomers.

Please keep in mind that many rentals in Canada, both furnished and unfurnished, do not come supplied, so make sure you budget for basic home necessities like furniture, dishes and utensils, linens, and even cleaning supplies.

Make sure to include this in your budget if you are bringing a pet, since some landlords may charge an additional cost.

Getting an Apartment to Rent

When you’ve discovered a property you like, get in touch with the landlord to arrange a time to see the apartment. The landlord will send you an application form to fill out and return if you like what you see. Please let your landlord have at least 48 hours to respond.

Your landlord will email you the lease document to examine if you are approved as a renter. If everything checks out, you will sign it, provide your deposit (more on this below), and go through the move-in details. You will get the keys to your new home on move-in day after paying the first month’s rent.

Vacation Rentals

Consider short-term rentals as your first accommodation choice if you’ve recently arrived in Canada. Several factors make this a wise decision: Before moving anywhere, you could first wish to visit the local neighborhoods and get to know them. Additionally, some ex-pats prefer purchasing overseas accommodation based only on images to booking anything after having seen it in person. Short-term rentals, in general, provide you with a little more time and flexibility while looking for your new home away from home.

For any budget, there are several short-term rentals in Canada. It is often best to make your appointments for these services before you arrive.

Investigate and Evaluate Costs

You must first establish what sort of rent costs are normal for the neighborhood to decide on a suitable rental price. To determine how much to charge prospective renters, landlords often compare their rates to those of nearby rentals. However, sometimes they may overestimate what they can demand.

You may be able to use this information to bargain for a lower rent if a rental property is pricey in comparison to other properties in the neighborhood. In a similar vein, if you’re renting in a neighborhood with a lot of abandoned homes, your landlord could be more inclined to give you a discount.

Conclusion

Yes, rental prices are rising in Canada, but there is always room for savings. With the right financial planning, you can avoid unnecessary purchases for the sake of basic needs.

See:  Good Reasons Why You Need To Have A Proof Of Income

Most likely, such a rise in prices in the real estate market is temporary, so it is important not to stress too much, but treat it as a temporary difficulty. Also, if you want to save on rent, then it makes sense to haggle and look for great deals longer and even possibly consider moving to a region with cheaper rent.


NCFA Jan 2018 resize - Unprecedented rent growth in Canada: Reasons and How to Cope with It?The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada’s Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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