The highest average rents in the country in the second quarter of 2024 were in Metro Vancouver, at $4.25 per square foot, according to the latest quarterly data from Zonda Urban. Metro Vancouver holds the top spot for the second quarter in a row.
Close behind was the GTHA, with average rents registering at $4.22 per square foot, despite a general softening in rental rates in the region, against the growing vacancy rate.
Of the seven markets that Zonda Urban monitors, Kelowna was a hot spot, with the largest quarter-over-quarter jump in average rent from $2.55 to $2.71 per square foot per month, while overall vacancy in the market dropped significantly in Q2-2024, indicating that supply is lagging burgeoning demand in that market.
Notably, this is the highest average rental rate increase on record for Kelowna.
Rents climbed modestly in Victoria, Ottawa and Edmonton, reflecting the slow, but steady growth in those markets.
Calgary and the GTHA saw a slight drop in average rental rates in the second quarter, compared to Q1-2024.
Edmonton remains one of Canada’s most affordable rental markets. Although rents have grown steadily in Edmonton, they still are the lowest amongst the markets that Zonda monitors, at $2.23 per square foot.
Vacancy rates vary throughout the country. The GTHA has the highest overall vacancy rate by a wide margin, at 12.5 percent, followed by both Edmonton and Ottawa at 6.6 percent.
Location, location, location
Central locations command rent premiums, as is evidenced by Zonda Urban’s data, with downtown rental rates outpacing outlying areas.
With steady population growth in urban areas, and a deep renter pool, demand in amenity-rich downtown areas is robust. Zonda Urban anticipates long-term growth in downtown rents, at a quicker pace relative to outlying areas and submarkets.
Is this the right time for renters to become homeowners?
Although a growing segment of the population rent by choice, given the turn-key lifestyle that renting offers, many renters are hopeful homeowners looking for the opportunity to climb on to the property ladder.
The market has been challenging for would-be homeowners. High rents relative to income in many cities make it hard to accumulate a down payment, and housing prices remain stubbornly high, despite the market moderating in several cities.
But in recent weeks house hunters may see a glimmer of hope on the horizon, particularly in the new construction market.
“With our new sales numbers in and another rate cut from the Bank of Canada, some are starting to look at the pre-construction market again. While new launch activity has generally dried up in the condominium apartment sector, townhomes are consistently launching and selling,” says Jasmine Cracknell-Young, vice president, advisory with Zonda Urban.
“Townhomes offer great pricing relative to traditional single-detached product located in established or establishing communities. For those who have the capital for a quick close, the assignment market is flush with listings on the condominium apartment side. While those with time are seeking out cash back incentives, extended deposit structures, and closing dates well into 2027.” she says.
In addition to the Bank of Canada’s recent rate cut, house hunters can take advantage of a new affordability aid specifically geared for purchase of new construction homes.
Previously, mortgages had a maximum amortization of 25 years. As part of affordability measures included in the federal budget for 2024, mortgages, for those who qualify, will be able to be extended to 30 years.
That extra five years can extend the purchasing power for house hunters and make monthly payments more affordable.
This amortization schedule is only available to first-time homebuyers, and it is only applicable to new construction homes. It’s only available for insured mortgages (with less than 20 percent down).
While extending amortization reduces monthly costs in the short term, house hunters should remember that extending the life of a mortgage will come at a higher cost in the long term.
