As Canadians grapple with the ongoing challenge of finding affordable rental housing, experts suggest that despite efforts to address the issue, the country's rental market will continue to face hurdles in 2024.
Steve Pomeroy, a senior research fellow at Carleton University's Centre for Urban Research and Education, acknowledges the recent boost in rental construction as a positive step. However, he warns that the increase in supply will take time to catch up with the demand, leaving renters with lingering challenges in the short term.
"We've significantly increased our game in terms of adding new rental supply," Pomeroy explained. "But it's a lag issue. It's going to take a bunch of years… to catch up, and if we don't suppress demand in the short term, we're going to continue to have short-term pressures."
Shaun Hildebrand, president of real estate consulting firm Urbanation, shares a more optimistic view for 2024. While he anticipates that rent prices will remain elevated, he expects the rate of increase to slow down, especially in more expensive markets. The latest data from Urbanation's monthly rent report indicates a gradual slowdown in the annual rate of rent growth across Canada.
Hildebrand highlights a recent decrease in average rent prices in Toronto and Vancouver toward the end of 2023, attributed in part to seasonal demand changes. He suggests that early 2024 may be a favorable time for renters to take advantage of this cooling trend, although structural supply deficits persist in these markets.
Factors such as a potential decline in inflation and interest rate cuts in 2024 could alleviate some pressure on rent prices. Hildebrand notes that as first-time homebuyers enter the ownership market, the demand for rental properties might ease. However, he cautions that home prices will likely remain a barrier for many Canadians.
In a bid to encourage new developments, the federal government and Ontario have taken steps to remove the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) on new rental projects. While developers welcome these changes, challenges in the construction process still hinder the swift addition of supply to the market.
Giacomo Ladas, representing rentals.ca, acknowledges the positive impact of tax measures on rental construction's economic viability. However, he underscores the lingering hurdles developers face, emphasizing the need for further improvements.
Population growth, particularly due to record immigration numbers, plays a significant role in the rental supply shortage. Pomeroy and other experts argue that the surge in non-permanent residents, including temporary foreign workers and international students, has contributed to excess demand.
Despite the federal government's plans to regulate immigration and income requirements for foreign students, Pomeroy believes that these measures may not significantly reduce the influx in 2024. Without aggressive action to manage immigration, the pressure on rental markets is likely to persist.
As Canadians navigate the challenges of the rental housing market, the outlook for 2024 suggests a complex interplay of construction pace, market dynamics, and immigration policies that will continue to shape the affordability landscape for renters across the country.
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