The Hamilton Spectator

New report calls for more rental units amid shortage

Canada needs more than 300,000 new units to avoid gap quadruplin­g by 2026

- SAMMY HUDES

Canada’s rental housing shortage will quadruple to 120,000 units by 2026 without a significan­t boost in stock, Royal Bank of Canada said in a report Wednesday.

In order to reach the optimal vacancy rate of three per cent, the report suggested Canada would need to add 332,000 rental units over the next three years, which would mark an annual increase of 20 per cent compared with the 70,000 units built last year.

The research analyzed vacancy rate data released in January by the Canada Mortgage and Housing Corporatio­n (CMHC).

Canada’s vacancy rate fell to 1.9 per cent in 2022, its lowest point in 21 years, from 3.1 per cent in 2021.

Competitio­n for units also drove the highest annual increase in rent growth on record, by 5.6 per cent for a two-bedroom unit.

Canada’s rental housing stock grew by 2.4 per cent in 2022, led by Calgary at 7.4 per cent and Ottawa-Gatineau at 5.5 per cent, while Toronto and Montreal saw the smallest percentage increases at 2.1 per cent and 1.4 per cent, respective­ly.

“We haven’t seen that many additions to the purpose-built inventory in almost a decade, so you would think that added supply of units would ease some of the competitio­n, but what the CMHC rental market data revealed to us was that it didn’t,” said RBC economist Rachel Battaglia.

Slow growth in Canada’s two most populous cities has been outpaced by rapidly increasing demand, partly fuelled by high immigratio­n levels, she said.

Annual federal immigratio­n targets are set to grow eight per cent by 2025, meaning demand is unlikely to let up.

Battaglia also pointed to affordabil­ity and behavioura­l preference­s for the influx of rentals sought. She said more Canadians are choosing to live alone, meaning fewer incomes per household.

“You have a lot of people being funnelled into the rental market who maybe would have liked to own something but it’s just not financiall­y in the books for them right now,” said Battaglia.

The report estimated an existing deficit of 25,000 to 30,000 units of rental stock across Canada. In addition to building more supply, it recommende­d turning condo units into rentals, converting commercial buildings and adding rental suites to existing homes to help ease the pressure.

Without such measures, Battaglia said the market could “become infinitely more competitiv­e.”

 ?? THE CANADIAN PRESS FILE PHOTO ?? The report estimated an existing deficit of 25,000 to 30,000 units of rental stock across Canada.
THE CANADIAN PRESS FILE PHOTO The report estimated an existing deficit of 25,000 to 30,000 units of rental stock across Canada.

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