The rental space could expect some substantial financial pressures ahead, observers say
With the Bank of Canada’s latest policy decision holding the benchmark interest rate at 4.5%, landlords and renters alike could expect some substantial financial pressures in the near future, according to market observers.
Daniel Foch of RARE Real Estate said in an interview with BNN Bloomberg that the elevated rates have pushed many owners to list their properties for sale. Foch noted that in Toronto alone, the number of such sellers has increased by approximately 300% annually.
“It’s time that’s killing landlords financially,” Foch said. “The freeze in interest rates means they are forced to carry higher costs for prolonged periods of time.”
Any remaining rental supply tends to become more expensive than actual ownership, Foch added.
“This kind of pressure could likely drive some renters who have been on the sidelines for quite some time to enter the buyer market,” he said.
Davelle Morrison of Bosley Real Estate told BNN Bloomberg that the high-rate environment is not sustainable for the rental markets in the long run.
“For every month we have a rate pause, there will be landlords who will struggle to hold onto their rental properties,” Morrison said.
"Most landlords have to start charging more in rent just to keep up with heightened costs that come with interest rate hikes — which of course have a trickle-down effect into the rental market at large.”
