Kitchener average annual rents still rising but not as fast
According to the Rentals.ca and Urbanation latest National Rent Report., average asking rents in Canada reached a record high of $2,042 in June. This marked a 0.9% increase over the previous record set in November, with average rents for all property types rising by 20% over the past two years, equivalent to an average increase of $341 per month.
In terms of specific cities, Cambridge ranked 12th out of 35 cities for average monthly rent in June for a one-bedroom home, with an average of $2,011. For a two-bedroom home, Cambridge ranked 16th with an average monthly rent of $2,399. Compared to the previous year, average monthly rent in June for a one-bedroom in Cambridge increased by 11.3%, while a two-bedroom saw a 7.5% increase.
Kitchener ranked 17th on the list for average monthly rent in June for a one-bedroom home, with an average of $1,889. For a two-bedroom home, Kitchener ranked 17th with an average monthly rent of $2,338. Year over year, average monthly rent in June for a one-bedroom in Kitchener increased by 3.6%, while a two-bedroom saw an 11.1% increase.
Waterloo was not included in the list, but the average monthly rent in June for a one-bedroom home was $1,664, and for a two-bedroom, it was $2,333. Year over year, average monthly rent in June for a one-bedroom in Waterloo increased by 18.8%, while a two-bedroom saw a 24.2% increase.
Among the top 25 mid-sized markets for purpose-built and condominium apartments in June, Guelph experienced a 13.4% increase in average monthly rent, St. Catharines saw a 10.7% increase, and Waterloo had an 8.9% increase.
For purpose-built and condominium apartments, the average monthly rent in June was $2,312 in Cambridge, $2,132 in Kitchener, and $2,077 in Hamilton.
Bank of Canada rate hike affected different markets differently.
The analysis of early housing market reports suggests that the Bank of Canada’s recent interest rate increase had varying effects on home buyers across different cities in the country. According to an RBC report, the rate hike in June led to a situation where buyers “retreated” in cities like Toronto, Hamilton, Ottawa, and Vancouver, but “remained undeterred” in Calgary, Edmonton, Montreal, and B.C.’s Fraser Valley.
The economists also attribute the “strong price gains” observed in Toronto, Vancouver, and other parts of Ontario and B.C. during the spring as a possible factor that may have “spooked some buyers.”
Although the supply of homes has been increasing, it has not yet significantly alleviated the upward price pressure in the market. However, if the growing supply is sustained, it is expected that the pace of property appreciation will slow in the coming months.
In June, the Bank of Canada raised its overnight rate by 25 basis points to 4.75%, marking its first increase since pausing hikes in January. The central bank started raising interest rates in March 2022 to manage inflation, which had risen as high as 8.1% last summer but had fallen to 3.4% as of June.
Home Price Index composite benchmark price increasing by 2.5% month-over-month to $1.16 million in June.
However, the report suggests that more balanced conditions indicate a slower pace of appreciation in the future. Higher interest rates are expected to keep homeownership affordability extremely challenging for buyers. In Vancouver, property values increased by 1.3% last month following a combined 3.1% increase in the previous two months. The economists predict that buyers will increasingly resist further price appreciation in the near future.