Canadian renters are still grappling with affordability issues even though rent prices have decreased this year, while those contemplating the move to home ownership are adopting a wait-and-see approach, a new report suggests.
Thirty-seven percent of the more than 1,800 renters surveyed in early June said they were spending between 31 and 50 percent of their net income on rent, while 37 percent were spending 30 percent or less.
Rental prices have decreased for eight straight months, but still exceed historical norms, the report noted.
It said rents in Canada have increased by 5.7 percent compared to two years ago and by 12.6 percent compared to three years ago. The average asking rents in Canada have grown by an annual average of 4.1 percent in the last five years.
Forty percent of those polled said they have reduced spending on groceries and food due to rent costs, while 30 percent have reduced contributions to savings or retirement, and 21 percent are accumulating credit card debt. Twenty percent of respondents said they are taking on a second job or “side hustle” to make ends meet.
Home Ownership
More than 50 percent of renters surveyed said they plan to purchase a property in the future, but only 16 percent reported that they intend to do so in the next two years.Twenty-eight percent of renters said they had thought about purchasing a property prior to signing or renewing their existing rental agreement while 40 percent are waiting for home prices to decline, and 29 percent are postponing their decision until interest rates drop further.
Soper said the data indicates many tenants are eager to secure a position on “the property ladder,” but cautioned that waiting for the ideal opportunity might prove to be a misstep.
“In Canada’s least affordable cities, entry-level opportunities have improved significantly, with home prices off last year’s peaks, incomes up and borrowing costs trending lower,” he said. “Still, many renters ... are choosing to wait. History suggests they may be disappointed. Over the past 75 years, Canadian home values have risen approximately five per cent annually, running consistently ahead of inflation.”
Not all renters are interested in home ownership, however. Nearly one-third of renters do not plan to purchase a home at all, the survey found.
Fifty-three percent of the respondents who aren’t interested in home ownership said their income would not allow them to purchase a property in their desired neighbourhood, while 40 percent said renting is still the more affordable alternative. Another 40 percent expressed reluctance to take on the duties of maintaining a property.
