BUSINESS
04/24/2019 14:49 EDT | Updated 04/24/2019 14:56 EDT

Statistics Canada’s Rental Housing Measure Is Now A Vertical Line Upwards

But there appears to be a sudden cooling in the market this month.

anyaberkut via Getty Images

For those of you who've given up on ever buying a home, we've got more bad news: Canadian rents have been rising at their fastest pace in decades, pushing up the cost of living at a time when households are already struggling to pay the bills.

But there may be some consolation for renters to be found here: It looks like the run-up is over, at least for now, and rents have actually fallen in many places over the past month.

"Rent increases have been the third largest contributor to headline inflation over the past 12 months, trailing only mortgage interest costs and autos," Bank of Montreal chief economist Doug Porter wrote in a client note this week.

Porter charted out the change in the rent component of Statistics Canada's consumer price index. It's basically turned into a vertical line shooting upwards.

BMO Economics
Canadian rent inflation (the blue line) has accelerated since Statistics Canada changed its methodology to one that many say is more accurate. The red line shows overall inflation in Canada's economy.

"After averaging just 1.2 per cent annualized gains over the past 15 years, rents have jumped 2.7 per cent year over year," Porter noted.

If that 1.2 per cent average seems a little low to you, you're not the only one who thinks so. Statistics Canada recently changed its methodology for estimating rents, to one that Porter says is "closer to reality." Since then, rents have been on an upward tear in the agency's data.

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But it might just might be the case that the long run-up in rental rates is taking a breather. Rental sites that track asking rents for apartments are reporting a sudden cooling in the market over the past month.

Of the 24 cities covered by rental site Padmapper, only four saw an upward trend in rental rates in March Edmonton, Saskatoon, St. Catharines and Windsor.

Seventeen are stable, and three — Calgary, Montreal and Winnipeg are seeing downward pressure (see chart below).

Earlier on HuffPost Canada:

One-bedroom rents in Toronto and Vancouver were unchanged this month, but still up 10.8 per cent and 4.5 per cent, respectively, over the past year.

Two-bedroom apartments were unchanged in Toronto and fell 4.9 per cent in the month in Vancouver, Padmapper found.

According to Rentals.ca, the median asking price for rental properties nationwide was $1,750 in March, down 2.7 per cent from February.

"Despite the record number of condominium units under construction, the number of condos completed in Toronto last year was not enough to keep up with demand, especially since the new mortgage stress test limited credit for many first-time buyers," Rentals.ca said in a report issued this week.

Relief on the horizon?

Many experts have said that rising house prices have led to rising rental rates, as would-be homeowners are forced to stay longer in rental housing, increasing demand for apartments.

But Rentals.ca sees some relief on the horizon. The Bank of Canada signalled on Wednesday that it has put any further interest rates on hold for the time being, which should help homebuyers who have seen mortgage rates rise over the past year. That should take some pressure off the rental market.

Additionally, the government's First-Time Home Buyer Incentive, announced in the budget last month, along with an incentive program to build more rental apartments, should ease pressure on the rental market going forward, the report said.

Rental rates for March, 2019, from Padmapper.

Padmapper