Defying expectations of the rental asset class being an escape from the crushing costs of ownership, tenants in Canada’s hottest markets are labouring under elevated rent rates.
According to the Canadian Rental Housing Index, mid-income earners in Toronto and Vancouver have to allot, respectively, around 40% and 91% of their pre-tax earnings to rental housing expenses.
Torontonians earning just over $45,000 annually will find the situation in markets outside the downtown area to be of no comfort: In the Peel or York regions, they will need to set aside 38% and 44% of their incomes.
The costs of living in Toronto’s rental units have been in lockstep with the city’s home sale prices. In August, the average selling price in the city was $792,611, growing by 3.6% year-over-year.
“The national average price is heavily skewed by sales in the GVA and GTA, two of Canada’s most active and expensive housing markets,” CREA explained in a study.
“Excluding these two markets from calculations cuts more than $100,000 from the national average price, trimming it to less than $393,000 and reducing the year-over-year gain to 2.7%.”
Even in relatively affordable Regina, low-income renters will have to dedicate more than half of their earnings for monthly payments.
And there seems to be no relief in sight, as rent rates have been going up – impelled by supply unable to keep up with the need for more affordable housing.
Data from Canada Mortgage and Housing Corporation showed that roughly 37,000 new apartment units were built nationwide in 2018. In contrast, immigration-driven demand surged by as much as 50,000 units during the same year.
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