With about three in 10 working Canadians losing their jobs or having their wages cut in recent months, rental rates are declining in many cities.
The national average asking price for apartments fell 3.2% in one month to $ 1,842 per month for all types of housing in April, according to data from the rentals portal Rentals.ca.
Condo rental rates fell 4.6% to $ 2,268.
Unfortunately, this comes at a time when most Canadians are in no rush to go apartment hunting – and many others cannot rent at all.
“With most of the country locked out, the majority of tenants remain on site for financial and health reasons,” Rentals.ca said in a report released this week.
“Many large landlords remain firm on their demanded rents, ready to wait for the pandemic, offering incentives such as a $ 500 rebate or a month’s free rent. Small homeowners seem more inclined to lower their asking rent to attract potential tenants looking for apartments. “
According to data cited by CIBC economists, between 75% and 90% of Canadians paid their rent in early May, roughly the percentage of April.
Things would probably have been worse if it weren’t for the Canadian Federal Emergency Response Benefit (CERB), which provides $ 2,000 a month for four months to those who lost their jobs during the pandemic, said CIBC economist Benjamin Tal.
“Despite the fact that most of the recent decline in employment is concentrated in low-wage occupations, the collection rate in April was higher among low-income renters. … This may be explained by the availability of money from CERB (which probably played a bigger role in the rent payments for May), “Tal wrote in a note to a client earlier this month.
Some of the more expensive cities experienced the largest declines. One-bedroom units in Toronto fell 4% in April from March, while two-bedroom units fell 7.7%.
In Vancouver, one-bedroom units fell 5.6%, while two-bedroom units fell 15.8%.
There is likely to be more downward pressure coming. With vacation travel on hold, Airbnb unit owners are putting their properties on the rental market, causing new listings to increase, said Rentals.ca.
“Thanks to COVID-19, Canada will have fewer immigrants (and) fewer international students and, with the border closed, not as many seasonal and part-time workers. All are generally renters, “the site said in a recent forecast.
“The drop in demand and the increase in supply due to the conversion of short-term rental accommodation to long-term rental accommodation will more than offset the lower supply resulting from a lower completion rate ( new housing)… and lower investment activity, ”CIBC Economists Benjamin Tal and Katherine Judge wrote in a report on May 1.
Affordable housing on demand
But with so many households experiencing declining incomes, “there will be more demand than ever for affordable housing,” said Matt Danison, CEO of Rentals.ca, in a report.
The owner-occupied housing market is also experiencing falling prices in the midst of the COVID-19 pandemic. Data released this week by the Canadian Real Estate Association (CREA) showed that the average selling price of a home in Canada fell by almost 11% from March to April.
All this is not due to the fact that the sellers lowered their prices. The slowdown seems to have hit the high end of the housing market harder than the others. With fewer high-end sales in the mix, the average price drops.