“Our outlook is for a slowdown in the pace of rent inflation over the next few years, in line with a rising unemployment rate and weaker population growth,” it predicted.
Rents have been rising fast and rent inflation is “much higher” than increases in the price of owned homes, it said. Inflation of rented accommodation was 8.3% in the third quarter of this year, “the fastest pace since the early 1980s.”
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Canada sets new immigration targets
Last month, the federal government announced plans to slash Canada’s immigration targets by 20% as the government faced increased pressure to address the cost and availability of housing.
Ottawa is also aiming to reduce the proportion of temporary residents, which includes temporary foreign workers and international students.
The Desjardins report noted that non-permanent residents “are more likely to rent than purchase a home due to the temporary or uncertain nature of their stay in Canada.” Many permanent residents also rent once they arrive in Canada, it noted.
“Lowering the number of newcomers should halt or possibly even reverse Canada’s population growth, slowing demand for rental accommodation,” the report said.
But while Desjardins expects rent inflation to slow, it said there is uncertainty around how the federal government will implement its new immigration policies.
“If the population slows faster than anticipated, the demand for rental accommodation will slow and price pressures will ease,” it said.
