Urbanation, a real estate research institute, released a survey result that the rate of increase in rent (monthly rent) in large cities such as Toronto is slowing. As a result of Urbanation’s analysis of data from rental sites (rentals.ca), the average monthly rent for a one-bedroom property in Toronto last month was $2,538, like the average of $2,526 for the previous month.
Compared to the same period last year, Toronto monthly rent increased by 15.5% in May this year, but this is a relatively low rate of increase compared to other months. For example, between April last year and April 2023, monthly rent rose 21.2%. This decline in the rate of increase can be confirmed in other cities as well. Vancouver saw rents rise 16.8% year-over-year in April, but the increase slowed to 9.7% year-over-year in May. Calgary also rose 22.9% year-on-year in April, but the rate of increase declined to 14.6% in May.
“Rent increases are easing on an annual basis,” said Urbanation Chairman Shawn Hildbrand. “The monthly rent is reaching a resistance point as it rises too fast compared to the rate of increase in the income of the tenants.”
Generally, monthly rent expenses should not exceed 30% of household income. According to Urbanation, you need to have a household income of at least $100,000 a year to pay the monthly rent of $2,526 for a one-bed in Toronto, and you need an income of $130,000 to get a two-bed at $3,286.
As an alternative to the skyrocketing rent, there are phenomena such as living with roommates and moving to other cities, but the situation is not easy either.
Living with a roommate is the fastest growing form of housing in Canada, with 15% of Canadians aged 20 to 34 living with a roommate in 2021. However, even if the rent is divided, it is difficult to obtain monthly rent for less than 1,000 dollars in Toronto or Vancouver. Toronto’s average “roommate rent” hit $1,299 in May.
The annual rate of increase in monthly rent in suburban areas is as high as Toronto. In Mississauga, the average rent for a one-bedroom apartment rose 19.2% year-over-year to $2,312; in Vaughan, the average rent rose 25.8% to $2,251; in Burlington, the average rent rose 12.7% to $2,244; and in Brampton, the average rent rose 27.1% to $1,969. Oshawa’s average rent rose 8.4% to $1,836, a year-over-year increase no less than that of larger cities.
“There is still high upside pressure in the market,” Hildbrand said. We expect the rise in monthly rent to slow, but the price will continue to rise,” he predicted.