Rent for a 2-bedroom in Montreal could hit $4,325 in eight years: study

Could rent in Canada's hottest markets top $7,500 in under a decade?

A new study by Montreal's Concordia University found that, if policies and trends remain unchanged, a two-bedroom in Montreal will cost $4,325 per month, a similar unit in Toronto will cost $5,600, and one in Vancouver will be around $7,750 within eight years.

Researchers used artificial intelligence to create projections based on data from the Canada Mortgage and Housing Corporation (CMHC), Statistics Canada, and immigration and population projections from the Government of Canada.

• Montreal home sales rise 18 per cent in September from last year

"We look at the past, how things affected rents, and then use government projections to predict the future," said lead researcher Erkan Yonder. "So, if you don't change what we do in Canada and if we keep, like, the immigration policies the same, if we keep our real estate policy, like supply policies the same, this is the outcome."

The Rentals.ca September 2024 report says that average two-bedroom rent in Vancouver is currently $3,632 (down 6.4 per cent this year), $3,158 in Toronto (down 7.5 per cent) and $2,276 in Montreal (up 1.8 per cent).

The average rent for a two-bedroom in Canada is $2,278 (up 4.3 per cent) and $2,168 in Quebec (up 4 per cent).

Lack of supply

Yonder said the housing supply is not able to keep up with the excessive demand and that local governments need to increase construction in certain areas.

"What we observe, right now, there's an unhealthy relationship," said Yonder. "We need to build six times what we build right now annually... And then, we could start talking about affordability. We could start talking about, you know, this is more a healthy economic relationship."

Yonder said the same supply problem is found in other countries that draw immigrants but do not have adequate housing stocks.

"We create demands, but we don't create supply matching with that demand," he said.

The CMHC reported that housing starts increased by 4 per cent in 2024, but that increase is not enough to meet the growing demographic demand.

In 2023, there were 30,000 fewer housing starts due in part to high interest rates.

Local problem

Yonder said that too often, the housing issue is examined from a national level but that the problem is local.

Some locations are extremely popular (such as metro Vancouver), while others are not. Local governments need to work with developers and institutional investors to direct populations seeking housing to areas where housing is available.

"So then it comes to the governments, especially the local governments, to develop policies that would make those lower demand locations, more attractive for such people," he said. "This could be done through, you know, attracting businesses into certain locations or directing them to certain locations. And then maybe we can direct the newcomers to those locations also."