Home prices across Canada have steadily climbed over the last five years. As affordability has changed and homes have crept further out of reach in that time, many prospective buyers have pivoted towards the rental market in the search for a home.
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With so many people changing tact and the Canadian population growing rapidly, the rental market has changed in that time as well, with rental prices increasing steadily in response to the affordability issue facing buyers. The average rent in Canada is now over $2,100, according to Rentals.ca, a near $900 increase in the last five years. But has rent increased at a higher rate than home prices?
To find out, Zoocasa analyzed data from major markets across Canada and compared how average sales prices have changed in the last five years to how average rental prices have changed at the same time.
Rental Price Growth is Outpacing Resale Price Growth Nationally
On a national level, rental prices have increased at a greater pace than sales prices. The average rent in Canada in 2018 was $1,270 and has since increased to $2,109, up 66.06%. In the same time period, average sales prices have changed by 36.37%, from $536,100 to $731,100 according to the Canadian Real Estate Association. With smaller monetary figures, percentage increases are more likely to be larger than you would see with six-figure home prices.
From city to city, price growth varies. The greatest increase in average sales prices is in Halifax. Prices in Nova Scotia’s capital have increased from $282,800 to $528,200 since 2018, marking an 86.78% increase. That’s over 30% higher than the city with the second greatest increase, Montreal, where prices have increased 54.40%. Toronto has had the third-highest increase, at 45.48%, followed by Calgary, Winnipeg, Vancouver and Saskatoon.
The greatest increase in rental prices is in Vancouver. The average rental price in 2018 was $2,000, increasing to $3,325 as of this year, up 66.25%. Montreal has had the second-greatest increase in rental prices, with a 58.91% increase from $1,280 to $2,034. As affordability has changed in the real estate market, rental markets have become more volatile with greater demand, forcing prices to go up.
Saskatoon is the outlier. It’s had the lowest increase in housing prices, with an increase of just 20.50% in the last five years. While that has happened, it’s also had the smallest increase in rental prices by far, with an increase of just 11.36%. Rent in the city is $267 cheaper than the next most affordable city on our list, Winnipeg. The lower increase in sales prices has meant that fewer buyers have felt the need to dip into the rental market, which has kept rent prices more steady.
Daniel Crook is a Content Marketing Specialist at Zoocasa. Daniel’s insights provide home buyers and sellers with knowledge of local and national markets to aid them in their real estate pursuits. Daniel covers a multitude of topics, ranging from mortgages to local market trends, as well as data-driven reports uncovering national trends.
His work has been featured in outlets such as BNN Bloomberg, CTV News, the National Post and the Globe and Mail. You can find all his latest insights on the Zoocasa blog.