Canadian landlords have endured a difficult 2020, but there is one metropolis that, according to a Rentals.ca report, is brimming with investment opportunity.
“Montreal is expected to be the top major market in Canada next year with rent growth of 6%, rising from $1,665 per month forecast for December 2020 to $1,760 per month,” the report said. “There is clearly no urban exodus in Montreal despite the strong rent growth in 2019, and the above-inflation increase in 2020, average rents are still relatively affordable in comparison to Vancouver and Toronto.”
In the Montreal region, which Rentals.ca called “a bright spot for landlords in Canada,” rents rose by 9% year-over-year to $1,454 for one-bedrooms in November, although rents were down 1.4% from October. Two-bedroom units in the City of Montreal increased by 5.1% year-over-year to reach $1,889 last month, and also rose by 0.4% from October.
However, if 2020 has been any indication, landlords in the Greater Toronto Area aren’t likely to see rents increase in 2021, at least to start the year.
According to the report, the city’s rents declined for 12 straight months in November, as the infusion of supply into Toronto’s long-term rental pool and a scarcity of renters have softened the market.
A one-bedroom unit in the GTA averaged $1,877 last month, plunging by 19% year-over-year and 2.3% month-over-month, but it’s still the highest in Canada. A two-bedroom unit in the region averaged $2,468, falling by 17.2% from November 2019 and by 2.6% from October.
“The average property for rent in Toronto is now $520 cheaper per month in November of this year compared to November of last year,” said the report. “The average rent dropped by a whopping 20% annually to $2,081 per month, lower than Mississauga. On a per-square-foot basis, the average rent declined from $3.60 PSF to $3.12 PSF, a decline of 13%.”
Short-term rental regulations and a dearth of international students, most of whom fled Canada when the COVID-19 pandemic struck and catalyzed lockdowns, has resulted in a proliferation of condo units in the City of Toronto that has rendered condo rentals the weakest segment of the regional real estate market.
“We’ve monitored the market and, pre-COVID, we had 4,500 rental condos units available in Toronto, and in August the number grew to above 10,000 units,” said Alex Balikoev, senior vice president of sales at Sotheby’s International Realty Canada. “The reasons for that were job losses and a drop in immigration.”
The average rent in Canada, according to Rentals.ca listings, was $1,743 in November, which declined by 9.1% year-over-year and by 2.2% month-over-month.
The average rental price of a one-bedroom unit in Vancouver was $1,865 in November, falling by 5.2% from the same month in 2019, and by 1.9% from a month earlier, while a two-bedroom unit averaged $2,636 last month, which is a 13.8% year-over-year decline and a 2.8% month-over-month drop.
“In November of last year, the average rent in Vancouver for all property types on Rentals.ca increased by 7% annually to $2,507 per month,” said the report. “A year later, the average rent is down 12% year-over-year to $2,216 per month.”
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Written by Canadian Real Estate Wealth.
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Canadian Real Estate Wealth