New February 2024 CPI Rent Data
Rent in Canada continues to surge, completely unaffected by recent Government of Canada and Bank of Canada interventions.
According to Stats Canada, rent in Canada is up 8.2% year-over-year in February 2024, with Alberta seeing the largest increase at 14.2% YoY.
The Bank of Canada blames shelter inflation on a supply shortage, while some politicians have blamed rent increases on the Bank of Canada’s recent tightening.
Rents Up 29% Since Feb 2021
Regardless of finger-pointing and blame, Canadian renters are left holding the bag, with average rents up $500 per month in three years.
There is common agreement that at least part of these price increases come as a result of supply shortages. The CMHC recently reported that Canada would need 5.8 million homes by 2030 to restore affordability. They would need to build another Ontario.
Have Wages Kept Up?
Rent increases are fine if wages have kept pace with inflation, right? In that case, its just raging inflation.
Well, that’s not what’s happening. Wages are not keeping up with rent inflation, putting renters in a financial vice grip and eroding their disposable income.
According to Stats Canada, wages have only gone up 7% between January 2021 and Dec 2023.
Rent is up 29% and Wages are Only up 7%, What Happens Next?
Shelter is basic necessity, and Canadians will have to start either taking on second jobs, take on more debt or cut back on other expenses to balance their books.
There is some evidence this already happening —
Credit Card Usage is Way Up:
Bank of Canada data shows that Canadians are relying more on credit card debt to make ends meet, with chartered banks showing almost $100B lent out via credit cards:
Food Bank Usage Is Up:
There have been plenty of media reports that food bank usage is way up as Canadians struggle to make ends meet.
What Happens From Here?
Considering Canada will not meet its target of 5.8 million homes by 2030 (we’re only building 230,000 per year), this could be long and drawn out.
Without a significant drop in rental accommodation inflation, though, it is difficult to see how the Bank of Canada will achieve its 2% inflation target and be able to cut rates….
….which will lower mortgage interest costs for landlords…
….which they might pass on to renters, which would lower rental CPI.
The old “chicken or the egg” problem.
