Canada is facing a rental housing shortage, with a shortage of 120,000 units by 2026, according to new projections. report By Royal Bank of Canada (RBC).
The bank estimates that the Canadian rental housing market is already facing a shortage of about 25,000 to 30,000 units, and to achieve a balanced market with stable rents by 2026, Canada will need It said it needs to add another 332,000 rental units.
RBC shows Canada’s rental housing stock will grow at its fastest pace since 2014 in 2022, while vacancy rates have fallen to a 20-year low. The bank said the housing gap could exceed 120,000 by 2026, quadrupling the current housing shortage, unless the rental inventory increases significantly.
“This will push the housing market into a greater imbalance, further pushing the 3% optimal vacancy rate further away,” the bank said. The record surge in demand and rising rents are attributed to rising immigration and the loss of housing affordability.
The bank says an annual federal immigration target is set to grow 8% by 2025, keeping demand for rental housing high.
Toronto and Montreal, which are projected to have the highest immigration demand, experienced the least growth in rental housing supply compared to other cities.
“With Canada’s immigration targets set at record levels and poised to continue to stretch affordability, pressure is unlikely to abate,” the RCB said.
The bank also showed that Canada’s homeownership rate is at its lowest level in 30 years, even though the country built a record number of apartments last year.
The country’s rental housing stock grew at 2.4%, the fastest pace since 2014, but the rate of growth varied across cities, according to RCB.
Among the six largest cities, Calgary and Ottawa-Gatineau showed the largest increases in new rental housing at 7.4% and 5.5% respectively.
Canada’s two most populous cities experienced rapid immigration but slow rental growth. Toronto grew 2.1% last year, but hosted an estimated 32% of international migrants, according to the report. Montreal’s growth rate was her 1.4%, while its acceptance rate of international immigrants last year was her 10%.
Rental inventory will drop to 1.9% in 2022, the lowest level in more than 20 years, according to RBC.
“The overall decline of 120 basis points in just 12 months was the sharpest in more than 30 years, and relentless competition for housing has led to record annual rent growth,” the bank said. Stated.
“A closer look at the rental apartment market in Canada’s big cities shows even tighter conditions. Condo vacancies in Ottawa Gatineau (0.7%), Toronto (1.1%) and Calgary (1.8%). is the lowest in the country, suggesting intense competition is only putting pressure on rents,” RBC notes.
Rent growth also surged across the board, increasing by 5.6%. Two-bedroom rents in particular jumped sharply, rising 6% in Calgary, he 6.5% in Toronto, and 9.1% in Gatineau.
RBC suggested remodeling commercial buildings, converting condominium units to rentals, and adding rental suites to existing homes could help ease the pressure, but RBC said the only way to meet future demand was said the way forward is to see a significant increase in the supply of private home rentals.