Rent inflation to slow in the next few years, Desjardins predicts

The rate at which Canadian rental prices are increasing should slow in the coming years as the government's plan to cut back immigration numbers takes hold, a new report from Desjardins says.

The rate at which Canadian rental prices are increasing should slow in the coming years as the government's plan to cut back immigration numbers takes hold, a new report from Desjardins says.

"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 per cent in the third quarter of this year, "the fastest pace since the early 1980s."

Last month, the federal government announced plans to slash Canada's immigration targets by 20 per cent 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.