There is home ownership, which has become unaffordable for the average buyer, and its repercussion, access to the rental market, with the availability of affordable housing tending towards scarcity.
The Parliamentary Budget Officer (PBO) observed on Thursday that home ownership has become even less affordable during the pandemic for the average buyer. He estimated that home prices in Toronto, Hamilton and Ottawa were more than 50% above an affordable level at the end of 2021. For Vancouver and Montreal, he is talking about prices of around 30% at 45% above estimated affordable levels in December 2021.
The PBO argues that the average income earner will find it increasingly difficult to afford a home in the future unless prices fall or wages rise. And that’s without taking into account the rise in mortgage rates that will mark 2022 and which will have an even greater impact on accessibility to property.
This bottleneck on the property market is not without repercussions on the rental market. The Canada Mortgage and Housing Corporation (CMHC) indicated on Friday that the vacancy rate on the traditional rental market remained stable in Canada in 2021, at 3.1%, which did not prevent it from decreasing in 21 of the 37 markets analyzed.
Major centers vs suburbs
For the Montréal census metropolitan area, the vacancy rate stands at 3%, a slight improvement from the 2.7% observed in 2020. However, if it remained relatively stable around its threshold said market, the proportion of vacant apartments varied according to the sector. It was 3.7% on the island of Montreal, and even reached 6.3% in downtown Montreal, but fell to 1.1% in the suburbs. At 2.2% in Laval, 1.1% on the South Shore and 0.4% on the North Shore.
The administrative region of Quebec shows the same asymmetry, its overall vacancy rate of 2.5% masking a tightening of the market in several sectors of the suburbs and on the South Shore.
“Of the 12,000 new apartments that have been added to the rental stock of the CMA [Région métropolitaine de recensement] of Montreal in 2021, about 60% will be in the suburbs,” writes CMHC. “As we observed on the owner-occupier market, it could be that a shift in demand from the island of Montreal to the suburbs has also occurred on the rental market. »
Newcomers vs occupying households
The scarcity of available housing has not been without fueling rent increases. Nationally, the average monthly rent for a two-bedroom unit rose 3% to $1,167. In the Montréal CMA, the overall increase in the average rent for a two-bedroom unit stands at 3.7% from October 2020 to October 2021, compared to 4.2% a year earlier, this latter increase having been the most strong since the early 2000s, notes the CMHC. If we add the 3.6% increase in 2019, we obtain a compound increase of 12% over these three years, the strongest sequence of increases since the 15% increase in 2001-2003.
“The scarcity of rental units in the CMA is the source of this sustained increase. The increase in rents is stronger in the sectors and for types of apartments where the vacancy rates are the lowest. This is particularly the case on the South Shore and in Laval, and for larger dwellings, ”continues the federal institution.
And as we know, the average rent used includes both that of newcomers and that of tenant households who have occupied their accommodation for some time. The rent for a two-bedroom apartment offered on the market was 22% more expensive than that of a unit currently rented ($1,134, versus $928). This gap is 27% in the suburbs and 21% on the island of Montreal.
CMHC adds that in 2021, only 13% of apartments (approximately 79,000) could be considered affordable for the poorest 20% of renter households (income under $25,000). For households with income between $25,000 and $36,000, 60% of apartments could be considered affordable. For it to be, the rent must not monopolize more than 30% of the monthly income, retains the CMHC.
And inflation?
Meanwhile, inflation as measured by the Consumer Price Index (CPI) rose 3.4% on an annual average basis in 2021, says Statistics Canada. Excluding energy, the average annual CPI increased by 2.4%. “Canadian consumers faced higher prices, especially for everyday necessities, including food (+2.5%), transportation (+7.2%) and shelter (+3.9 %). »
It should be noted that last year’s price growth changed speed between the first and second half of the year. The year-over-year pace was faster in the second half of the year, especially from August to December, when it exceeded 4% each month, the federal agency points out.