What Newcomers Need To Know About The Canadian Housing Crisis

Anyone considering making Canada their home may be feeling a little less certain amidst the current housing crisis. This is completely reasonable, given the dramatic headlines we’ve seen of late. But, it’s not impossible to find or buy a property in Canada – even in the throes of the current supply woes. We’re sharing our key insights about the Canadian housing crisis, including tips to find and secure housing, to help you make the most of your move.

Understanding the Canadian Housing Crisis

We won’t sugar coat it, it is becoming more challenging to find and secure housing in Canada. Vacancy rates across the country are extremely low, which means that the rental market is extremely competitive.

In fact, Canada’s vacancy rates are at a record-low — 1.5%. As a result, rental prices are increasing rapidly, with 2023 seeing an 8% increase. The rapid increases in rental rates hurts affordability, since the growth is outpacing wage increases – and all of this is happening amidst higher-than-usual inflation.

And newcomers to Canada are feeling the pinch. A recent study by the Institute for Canadian Citizenship noted that housing is the top concern for 68% of newcomers to Canada.

Government Interventions That Impact Foreigners

Canada’s government has recently introduced a host of reforms designed to address housing affordability in Canada. Unfortunately, some of the recent changes have directly targeted and impacted foreigners.

The Canadian Federal Government recently capped the number of international students for 2024 and 2025 to address the Canadian housing crisis. Then, the foreign ownership ban preventing international students and foreign investors (amongst others) from purchasing property in Canada was extended to January 1, 2027.

There’s also the 2022 Underused Housing Tax that taxes foreign owners 1% of the residential value if they keep a property vacant or underuse it. This tax is clearly designed to encourage foreign owners to make properties available for rent.

The Average Cost to Rent Property in Canada

The average price of a rental property in Canada varies widely depending on location and the size of the property. The details below are based on reporting by Rentals.ca.

The Most Expensive Cities to Rent in Canada

These cities are the top ten most expensive to rent in Canada:

• Vancouver, BC.
• Burnaby, BC.
• Toronto, Ontario.
• Mississauga, Ontario.
• North York, Ontario.
• Burlington, Ontario.
• Scarborough, Ontario.
• Brampton, Ontario.
• Guelph, Ontario.
• Ottawa, Ontario.

As you can see, Ontario properties, especially those in and around Toronto, dominate the ‘most expensive’ list – as well as a couple around Vancouver.

For reference, a one-bedroom rental property in these cities costs, on average, from $2,064 in Ottawa to $2,700 in Vancouver. A two-bedroom rental property ranges up to $3,660 in Vancouver.

Affordable Rental Locations in Canada

Not all cities have extremely high rental rates, however. These are some of the more affordable cities in Canada:

• Saskatoon, Saskatchewan.
• Lethbridge, Alberta.
• Regina, Saskatchewan.
• Fort McMurray, Alberta.
• Edmonton, Alberta.
• Quebec City, Quebec.
• Winnipeg, Manitoba.

Of the most popular locations for newcomers to settle in Canada, Montreal is the most affordable. Rentseeker.ca notes that a 1-bedroom rental in Montreal is $1,643 per month, over $1,000 less per month than Vancouver.

Tips to Find Housing During The Canadian Housing Crisis

While there are challenges that come with finding a home to rent or buy in Canada, it is possible if you’re persistent and potentially a little creative.

Move During Winter

The Canadian rental and property purchase markets both slow down during the winter months. For rental properties, there will likely be less competition for each property which means you have a higher chance of being selected. In some markets, rental prices also cool off a little over winter, so you may even be able to save tens or even hundreds of dollars each month by moving during winter.

If you’re looking to purchase a property, a winter sale might come with some advantages too. Depending on the market, there may be less competition for the purchase over winter. Spring has historically been the real estate season, and buyers can sometimes find a deal in the colder months. A winter purchase can also lead to a faster closing and greater availability for moving companies and tradespeople.

Open a Tax-Free Account, If You’re Eligible

The Canadian federal government offers a range of tax-free savings accounts which newcomers can use to save money, tax free.

The two accounts you might consider for housing are:

• A Tax-Free First Home Savings Account (FHSA; and
• A Tax-Free Savings Account (TFSA).

A tax-free FHSA is a registered account that allows you to save to buy or build a qualifying first home, tax-free up to certain annual and lifetime limits. In 2023, you could claim up to $8,000 in FHSA contributions as a tax deduction.

These accounts help hopeful home buyers save for their first purchase and is a tax deductible benefit. If you’re considering buying a property in the next years, it can be a valuable savings vehicle. Though, it’s worth remembering that you may incur penalties if you take the funds from the account for purposes other than buying a home.

A tax-free savings account is another option for home buyers, and a good option for renters too. A TFSA lets individuals over 18 and with a valid SIN in Canada set aside money tax-free each year. In 2024, you can contribute up to $7,000 to your TFSA. This account is different to a FHSA because it is an after-tax savings vehicle, and it is more flexible since you can withdraw the money for any purpose.

While every individuals financial circumstances are different and this should not be taken as individual financial advice, reasons you might consider using a TFSA for housing include:

• Creating a savings account to show potential landlords to strengthen your application. You can show them your savings account balance to demonstrate your ability to afford the home.
• Saving money, post-tax, for a property you plan to buy in the future if you aren’t sure you won’t need the money in the meantime.

Live Outside Major Cities

Finally, if housing affordability and access is your major concern as a newcomer to Canada, it’s worthwhile weighing up the benefits of living outside of the major hubs in Canada.

Houses tend to be more affordable in smaller, regional cities (except in some regions of BC and Ontario). Settling in these areas can mean greater purchasing power for housing.

However, there are drawbacks for settling outside of Canada’s major cities too. There may be less access to services, fewer options for shopping and education, and less public transport. Wages in these areas also tend to be lower, too.

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