City posts surprise rental market increase
London bucks a declining national trend in May, but many questions remain going forward
FOLLOWING A WHOPPING 11 per cent monthly decline in April, the average apartment and condo rent in London increased by 2.9 per cent monthly to $1,347 per month in May.
Last month, average monthly asking rents for one-bedroom units rose by 3.4 per cent to $1,238, while rents for two-bedroom units rose three per cent to $1,498. That represents year-over-year increases of 21.1 per cent and 18.4 per cent respectively, according to a monthly report from Rentals.ca, a national rental advertising and tracking website.
Nationwide, the average asking rent for all properties in Canada was down 1.4 per cent in May to $1,814 and 7.2 per cent from its September peak of $1,954.
“It comes down to supply and demand, and more and more people are wanting to live in London,” said Paul Danison, content director at Rental.ca, in an interview with the London Free Press. “When you have that kind of demand and suppliers aren’t keeping up, you are going to have increasing rents.”
Looking ahead, the report states it is still unclear how much pent-up rental demand there is for apartments, and how Covid-19 will impact rental decisions. Among the many unknowns: Will tenants with roommates prefer to pay more for a one-bedroom apartment versus share a two-bedroom apartment because they are now working from home? Will tenants use the funds previously earmarked for commuting, eating out and vacations to move-up to a larger apartment? Will tenants who are uneasy about commuting via public transportation buy a car and now need a rental suite with a parking space? Will tenants move out of the urban markets for less densely populated areas to ensure proper social distancing? How many short-term rentals will survive the pandemic, and how many will remain rented to tenants on one-year leases?
“There are so many unanswered questions, and the implications of those decisions will impact the rental market on both a macro and micro level,” noted Ben Myers, president of Bullpen Research and Consulting Inc. “We will continue to monitor the data and examine the trends as the economy slowly opens up.” 