Concordia and Equiton research highlights rising rents and low vacancy rates driven by immigration and demand
The John Molson School of Business at Concordia University, in partnership with private equity real estate firm Equiton, has released new research on the future of Canadian rentals and housing affordability.
The report, titled AI-Driven Insights into Key Factors Influencing Canada's Rental Market, was authored by Erkan Yönder, associate professor of Real Estate and Finance.
It examines how population growth and other trends are driving rent increases and low vacancy rates across the country.
The findings aim to assist policymakers, investors, and innovators in addressing Canada’s housing crisis.
One of the key findings predicts that rental rates in major cities, such as Vancouver, Montreal, and Calgary, will rise significantly. In Toronto, for example, the average two-bedroom apartment could see monthly rents climb to $5,600 in less than a decade, a 72 percent increase from 2023.
The report also challenges conventional thinking, showing that increased supply does not necessarily lead to lower rents.
It suggests that rental growth will continue to accelerate until annual housing completions reach about 6 percent of total dwellings, a level six to seven times higher than what was achieved in the GTA in 2023.
In fact, the GTA needs to reach an annual completion rate of 11 percent, nearly ten times the 2023 rate, before any decrease in rent is expected.
Immigration is highlighted as a major factor driving high rent levels. The findings reveal that a 1 percent increase in the share of immigrants in a market leads to a 0.6 percent rise in local rents, while a 1 percent increase in non-permanent residents drives rents up by 2 percent.
This increasing demand is contributing to vacancy rates approaching 1 percent across Canada.
Aaron Pittman, senior vice-president, and head of Canadian Institutional Investments at Equiton, noted the importance of regional analysis in addressing the housing crisis.
“We saw a lack of in-depth analysis of Canada's housing crisis at the regional level and felt the need to address that,” he said. Pittman added that Yönder’s AI-driven forecasts show how housing solutions that work in one region may not be effective in others.
The Canada Mortgage and Housing Corporation has also identified the private sector as an essential partner in addressing Canada’s housing shortfall. The government agency estimates that 5.8 million new housing units are needed by 2031, with 2.2 million of those units required as purpose-built rentals.
Yönder points out that new supply has historically failed to meet the pace required to address demand.
According to Yönder, “Canadian immigration and housing policies have been out of sync for decades.”
His research offers a roadmap for where private investment, regulatory changes, and infrastructure improvements can have the greatest impact on housing supply.
He plans to reveal further research in collaboration with Equiton later this year, made possible through the Equiton Research Fund in Real Estate at the John Molson School of Business.
