Experts are sharing their forecasts for the rental housing market in 2024. Despite renewed efforts by Canadian lawmakers to enhance housing affordability, experts anticipate ongoing challenges related to pricing and supply, exerting continued pressure on the country’s rental market.
According to Steve Pomeroy, a senior research fellow at Carleton University’s Centre for Urban Research and Education, recent increases in rental construction will only partially alleviate the supply shortage. Although Canada has made strides in adding new rental supply, Pomeroy emphasizes the time lag before renters experience significant relief. told BNNBloomberg.ca in an interview.
Shaun Hildebrand, president of real estate consulting firm Urbanation, predicts that rent prices in Canada will likely remain elevated in the coming year, but anticipates a slower rate of increase, particularly in more expensive markets. Urbanation’s recent report indicates a relatively flat average asking price of $2,174 in November, with an 8.4% year-over-year increase.
Hildebrand notes a deceleration in the annual rate of rent growth, with decreases in average rent prices observed in Toronto and Vancouver toward the end of 2023.
He suggests that renters may benefit from this trend in the early months of 2024, but cautions that structural supply deficits persist in these markets.
Factors such as a decline in inflation and potential interest rate cuts in 2024 could alleviate some pressure on rent prices, as first-time homebuyers enter the ownership market. However, Hildebrand warns that home prices are likely to remain prohibitive for many Canadians.
Despite challenges, Hildebrand expects the record price growth in the rental market to transition into the mid-to-lower single digits at the beginning of 2024.
The federal government’s decision to waive GST on new rental projects, along with similar measures by Ontario in removing their portion of the HST on new rental builds, has been welcomed by developers. However, challenges in the construction process persist, with developers citing hurdles that may delay projects.
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Experts, including Pomeroy, attribute the post-pandemic rental supply shortage and rising rent prices to record immigration numbers. They point to increases in the non-permanent resident population, such as temporary foreign workers and international students, as key contributors to excess demand.
While the federal government has outlined plans to address immigration levels and income requirements for foreign students, Pomeroy doubts significant reductions in 2024 without aggressive action.
In summary, the rental housing outlook for 2024 suggests persistent challenges in pricing and supply, with some alleviation expected in the long term but ongoing pressures in the short term.