Prices are falling but rents are rising in Canada's paradoxical housing market

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An unintended consequence of falling prices is the increased pressure on rental housing, write Murtaza Haider and Stephen Moranis. Read on

Recently released data by the Toronto Regional Real Estate Board has revealed that the average rent for a one-bedroom apartment, the most common type of rental abode, increased by 20 per cent year-over-year in the second quarter of 2022. The rents for two- and three-bedroom apartments increased by 15.3 and 12.8 per cent, respectively.

Townhouses constitute the other type of housing that is popular among renters. The increase in townhouse rents was relatively lower, with two-bedroom townhouses increasing by 11 per cent over the past year. However, trends in there were not uniform, with the number of leased three-bedroom townhouses increasing by 25 per cent in the second quarter compared to a slight decline in two-bedroom rental townhouses.

Another contributing factor is teleworking, which allowed many to work remotely from home during the pandemic. As a result, some workers gave up relatively smaller yet expensive leases near central employment hubs for cheaper and larger dwellings in smaller towns. With employers calling their workers back to offices, the demand for rental properties near employment hubs has been increasing, putting pressure on rents.

 

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