According to the Zonda Urban National Rental report for Q1 2023, all markets saw an increase in rental rates per square foot (PSF) over the last quarter, with the exception of Victoria.
With high interest rates sidelining some would-be homebuyers, demand for rentals remains robust and market conditions suggest that the trend will continue.
PSF rental rates were most expensive in the GTHA with an average of $4.14, which marks the third consecutive quarter the region tops the national list. The GTHA also saw a substantial year-over-year increase in average PSF rental rates in the first quarter, up 17 percent.
The GTHA narrowly edged out Metro Vancouver, which was the second priciest market in the first quarter, with a PSF rental rate of $4.10.
Both the GTHA and Metro Vancouver markets have been characterized by an ongoing lack of rental supply and are experiencing an uptick in demand as renters seek affordable housing.
Meanwhile, the lowest PSF rental rate in the first quarter was in Alberta with Edmonton at $1.91 and Calgary at $2.68.
Looking at year-over-year activity, although the rents are still low compared to the rest of the country, Calgary saw the biggest rental rate increase in Q1 at 17.3 percent, eclipsing gains seen in the GTHA.
Alberta is experiencing steady migration from other markets, as affordability woes continue to challenge renters across the country. While rents in the province are more affordable, relatively speaking to other regions, as vacancy declines with the push from demand, affordability will erode.
The province could be on the cusp of affordability challenges that have plagued other demand-heavy, short-supply markets.
Looking at vacancy rates, the regions with the highest overall vacancy rates were also the areas with the highest proportion of actively leasing projects with Ottawa and the GTHA at the top of the list.
Ottawa and the GTHA were also the markets with the highest downtown overall vacancy, at 22.1 percent and 16.8 percent respectively.
Year-over-year, the first quarter vacancy rates in Edmonton were indicative of the tightening of the market there, with the city experiencing the most substantial drop in both overall and stabilized vacancy rates in the country.
Similarly, Calgary experienced a significant first-quarter drop in vacancy rates, even with new supply added to the market. Notably, the vacancy levels reported in Calgary in the first quarter are the lowest seen there since the third quarter of 2018.
