Canada Rental Market Overview and Impact of First-Time Homebuyer Incentive Discontinuation:

Rental market trends in Canada indicate a significant shift towards renting among households. From 2011 to 2021, the proportion of Canadian households renting increased from 31.0% to 33.5%, marking a notable rise. The growth in renter households, at 21.5%, outpaced that of owner households, which saw an 8.4% increase during the same period.

 Over the past decade, there has been a substantial increase in rental starts, reflecting the growing demand for rental properties across the country. Purpose-built rental construction witnessed a remarkable rise from 6.9% in 2010 to 38.0% of all housing starts in 2022. The number of purpose-built rental units, reported by the Canada Mortgage and Housing Corporation, grew by nearly one-fifth from 2010 to 2020, indicating a significant expansion in the rental market.

 In 2023, average rental rates appreciated by approximately 6.0% nationwide, with certain submarkets experiencing even higher increases. For instance, submarkets like Coquitlam and Richmond saw rental appreciation rates at 10.0% and 9.0% respectively. However, this exceeds the provincial government's allowable rental increase of 3.5% set in 2024. Despite efforts to cap rental increases, recent renters find themselves facing market rents due to the disparity between the cap and actual market appreciation.

 Trends to Monitor:

 1- Despite increased rental construction, the supply deficit remains a persistent issue across Canada. Although efforts have been made to address the supply gap, the rate of improvement lags behind the growing demand.

 2- Immigration patterns significantly influence rental rates and vacancies nationwide, with a majority of immigrants initially opting to rent before purchasing a home. With Canada's population expected to double within 25 years, immigration, particularly among temporary residents, will continue to impact the rental market.

 3- 2024 is anticipated to witness continued rental price appreciation, albeit at a slower pace compared to previous years. While vacancy rates remain restrictive, the discontinuation of the first-time homebuyer incentive may influence rental market dynamics. The increased demand for rental properties, stemming from potential homebuyers unable to access the incentive, could lead to upward pressure on rental prices, especially in high-demand areas like Vancouver.

 In summary, the Canadian rental market is evolving rapidly, driven by demographic shifts, housing policies, and economic factors. The discontinuation of the first-time homebuyer incentive adds another layer of complexity to the rental market, emphasizing the need for stakeholders to closely monitor trends and adapt to the evolving landscape.