New renters paying an extra $500 a month in Toronto, Vancouver: CMHC

By
Millicent Wong
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0
253
financial contribution

  1. property

The gap between new tenants and those who have lived in apartments for more than a year is widest in cities where rent increases are regulated

Published on June 23, 2023 • 2 minutes reading time

A For Rent sign in Toronto. New renters in Toronto and Vancouver pay, on average, about $500 more than the rent for units occupied for more than a year. Photo by Cole Burston/The Canadian Press

A report by Canada Mortgage and Housing Corp. According to the report, the gaping gap in average rents between newly rented and already occupied units is increasing concerns about the country’s housing shortage.

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The June 22 report shows that rents for two-bedroom apartments rented in the major metro areas of Toronto and Vancouver in the past year are, on average, about $500 higher than rents for units rented for more than be inhabited for one year.

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“Given the population projections (which Canada’s major cities will see continued population growth), the gap is all the more compelling,” says the CMHC report.

The report found that the rent gap is particularly pronounced in cities where vacancy rates are already low and rent increases are governed by policies. Rent restrictions mean that property owners often have to wait for turnaround times to adjust rents to current market prices and offset expenses such as repairs and renovations. Toronto, Vancouver, and Montreal — where the gap is closer to $250 — all have rental policies.

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In Calgary and Edmonton, where there are no government guidelines on rent increases, the average rent gap is significantly smaller at $50. This finding suggests that a more flexible rental market allows for a relatively smaller discrepancy between rental prices, as homeowners have greater freedom to adjust rents to prevailing market conditions.

The median price of newly rented units is one of two new indicators the CMHC is using to understand the housing shortage. The other part measures the share of a market unit that individuals in the lowest income quintile (20 percent) can afford.

“Except for Quebec City and Montreal, the market share affordable for low-income households is less than 5 percent in major centers, 1 percent in Vancouver and almost none in Ontario cities,” the report said.

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“In the short term, market forces could be expected to restore some balance between supply and demand… But we have to question whether these forces alone are enough at this time.” exacerbate.”

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Last year, CMHC concluded that the country needs to build 3.5 million additional new housing units by 2030 to improve affordability. Canada currently only averages 200,000 to 300,000 new units per year.

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