Canada Housing Market

Toronto’s rental market is set for a significant price surge, with predictions pointing to a staggering 72% increase in rent by 2032. A recent study from Concordia University forecasts that average two-bedroom rents in Toronto could reach $5,600 per month by 2032, a sharp rise from the current rates. In the nearer future, rents are expected to jump by 26%, bringing the average two-bedroom cost to $4,100 by 2027.

The study, a collaboration between Concordia’s John Molson School of Business and Equiton, utilized AI to analyze the driving forces behind these increases, focusing on the imbalance between supply and demand. With immigration rates at record highs and a shortage of housing, particularly in major cities like Toronto, Vancouver, and Calgary, the rental market faces immense pressure. In Vancouver alone, rents are projected to increase by 52% by 2027 and 53% by 2032.

At the same time, a recent report from Rentals.ca shows a temporary dip in rent growth during the summer of 2024, a deviation from the typically robust rental season. This decline is attributed to a combination of increased housing supply and shifting demand, likely influenced by government policy changes. However, long-term trends suggest that rents will continue to rise, driven by factors like immigration, low vacancy rates, and limited new housing completions.

The Concordia study highlights Canada’s housing crisis, emphasizing that despite new developments, the pace of housing completions is insufficient to meet demand. With Canada having the lowest housing supply per capita among G7 countries and immigration levels at an all-time high, vacancy rates across the nation are shrinking. In fact, the study notes that a 1% increase in immigration can raise local rents by 0.6%, while a similar increase in non-permanent residents can push rents up by 2%.

For Toronto to see any stabilization in rent prices, the city would need to increase its annual housing completions to 11% of total dwellings, a rate nearly ten times higher than what was achieved in 2023. Nationwide, housing completions would need to reach about 6% of total dwellings to have a meaningful impact on rent growth.

This report underscores the need for strategic investments, regulatory adjustments, and infrastructure improvements to mitigate these rising rental costs. Without significant changes, rents in Toronto and other major Canadian cities are expected to continue their upward trajectory, making affordability a growing concern for residents.

References:

Average 2-Bed Rent Could Hit $5,600/Month In Toronto By 2032 (storeys.com)