Rents are coming down in many Canadian cities, but that doesn’t necessarily mean renters are finding it easier to make ends meet.
A new report from rental risk intelligence company SingleKey argues that income growth — or the lack of it — is increasingly important to rental affordability, with some smaller markets feeling more pressure even as rents soften.
Nationally, average rents fell 2.1 per cent year over year to $2,051, according to the company’s analysis of thousands of rental applications submitted between April 1 and June 30.
Toronto and Vancouver rents fall
Some of the biggest rent declines were recorded in Canada’s largest and most expensive cities.
Average rents fell six per cent in Vancouver to $2,833 and five per cent in Toronto to $2,623. Rent represented 27.7 per cent of household income among Vancouver applicants and 27.4 per cent in Toronto.
Montreal rents fell 8.8 per cent to $1,545, while Calgary recorded a 2.8 per cent decline to $1,997.
Halifax bucked the trend, with rents rising 5.5 per cent to an average of $2,206.
Lower incomes change the equation
The picture looks different in several smaller markets.
Rent accounted for 31.5 per cent of household income in Barrie, Ont., where household income among applicants fell 6.3 per cent year over year. In Greater Sudbury, Ont., household income dropped 21.5 per cent and renters spent an average of 29.9 per cent of household income on rent.
Winnipeg recorded an 8.9 per cent decline in average rent, to $1,572, but household income fell 20.5 per cent. Rent still consumed 29.5 per cent of household income.
“As rent prices have gone down in the past year, you’d expect that this would have solved the financial pressure for renters, but rent price is only half of the equation,” said SingleKey founder and CEO Viler Lika.
Single renters face a bigger squeeze
Household composition also made a significant difference.
Single renters spent an average of 40 per cent of after-tax income on rent, compared with a national household average of 28.1 per cent.
“Whether renters are a dual-income family, roommates, or co-signers, sharing housing costs can be a differentiator for many renters struggling to keep pace with payments,” Lika said.
Other signs of financial strain
SingleKey also found national debt collections increased 18.4 per cent year over year despite falling rents.
The report points to significant differences between markets. Medicine Hat, Alta., for example, had an average renter credit score of 656, with collections reported for 24.1 per cent of applicants and bankruptcies for 6.1 per cent.
Toronto applicants, meanwhile, had an average credit score of 742, with collections at five per cent and bankruptcies at one per cent.
The findings suggest that, at least among SingleKey applicants, the sticker price of rent alone doesn’t tell the full story of rental affordability.
