Desjardins forecasts a slowdown in rent increases over the coming years.

According to a recent Desjardins analysis, as the government's strategy to reduce immigration levels takes effect, the rate at which rental prices in Canada are rising should slow in the upcoming years.
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"Our outlook is for a slowdown in the pace of rent inflation over the next few years, in line with a rising unemployment rate and weaker population growth," it stated According to the report, rent inflation is "much higher" than increases in the price of owned properties, and rents have been growing quickly. The third quarter of this year had 8.3% inflation in rental housing, "the fastest pace since the early 1980s."

In response to mounting pressure to address housing affordability and availability, the federal government last month announced intentions to cut Canada's immigration targets by 20%.

Additionally, Ottawa wants to lower the percentage of temporary residents, which includes international students and temporary foreign workers.

As per the Desjardins survey, non-permanent residents "are more likely to rent than purchase a home due to the temporary or uncertain nature of their stay in Canada." After coming to Canada, a lot of permanent residents also rent, it said.

"Lowering the number of newcomers should halt or possibly even reverse Canada's population growth, slowing demand for rental accommodation," concluded the paper.

Although Desjardins anticipates a slowdown in rent inflation, it stated that there is ambiguity surrounding how the new immigration laws will be carried out by the federal government.

"If the population slows faster than anticipated, the demand for rental accommodation will slow and price pressures will ease," it stated.

However, the research stated that longer-term pressure on rent prices will result from higher-than-expected population growth that is more consistent with the Bank of Canada's recent outlook.

According to the paper, the consequences will also differ by area. Provinces like British Columbia and Ontario will see slower increases in rent inflation. Additionally, Desjardins stated that although rent inflation is anticipated to decrease in all major cities, it will "ease more" in Calgary and Edmonton.

"Considering how cyclical the economy is, rents in Alberta and Saskatchewan should decline the most quickly." market for rentals in various provinces. On the other hand, it forecasted that rent inflation in Quebec would remain high.


Desjardins observed that the proportion of rent-paying households nationwide has "risen dramatically," indicating that "rapidly rising rents impact a large and growing share of households across the country."

While "longer-term solutions require substantial increases in housing supply and policy efforts to address affordability across both rental and ownership sectors," it cautioned that any improvements might only last temporarily.



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