March 23, 2023

Real Estate News

RYPM

Failing a significant boost in stock, Canada’s rental housing shortage could quadruple in the next three years, economists warn, as immigration grows and affordability dwindles.

In a new report from RBC, Assistant Chief Economist Robert Hogue and Economist Rachel Battaglia estimate that Canada’s supply of purpose-built rental housing is already facing a 25K-30K unit deficit.

Although the stock of rental housing grew 2.4% in 2022, the fastest pace since 2014, the vacancy rate amongst purpose-built rentals fell to 1.9%, its lowest point in 21 years. The latter’s decline of 120 bps marks the steepest single-year drop in vacancy in over 30 years.

The boost in supply “has never been needed more,” but it was not directed where it’s needed most. Of Canada’s six largest census metropolitan areas, Calgary and Ottawa-Gatineau saw the biggest gains in purpose-built rental stock last year, up 7.4% and 5.5%, respectively.

Meanwhile, supply increased 2.1% in Toronto, and just 1.4% in Montreal. Not only are the two cities Canada’s largest, they are also the most popular destinations for newcomers, welcoming an estimated 32% and 10% of international immigrants, respectively, last year.

Despite the decades-low vacancy rate amongst purpose-built rentals, some cities’ condo markets are faring far worse. Condo rental vacancy rates sit at 0.7% in Ottawa-Gatineau, 1.1% in Toronto, and 1.8% Calgary.