Marketing Managers
Demand Trends for the Canadian Market:
This year while off to a strong start has hit a bump with rental demand declining in April following a month of strong growth. Active prospects declined by -2.9% nationally, while properties declined by -2.1%. This resulted in fewer average prospects per property and lower overall lead submissions nationwide.
This effectively reverses the growth experienced the month prior and brings the year-over-year change in prospects to -26%, comparing April 2024 to April 2022 data shows a -37% decline suggesting that long-term leasing trends are on a downward trajectory.
With fewer active prospects this year we expect leasing activity to be slower in the coming months. Additionally, this year's summer leasing season is likely to be depressed relative to the previous 2 years (April 2023 showed a month-over-month decline in prospects of -20%, compared to -26% in April 2024) suggesting that while the market in 2024 is significantly slower, the overall annual demand trends may hold with the rebounding of demand in May through June.
Renters have reduced their online activity with average leads per prospect down -1.8% month-over-month, while lower than the previous month, remains up over the past 3 months suggesting that renters are gradually becoming more motivated and are submitting more leads on average as we head into 2024’s peak leasing season. The next few months will be important to track as they will indicate how the remainder of the year will go. However, based on the long-term trends of declining demand we expect that even with elevated leasing activity during the summer months; this year will continue to be depressed relative to the previous 2 years. New units will come to market, which will help the supply shortages in some markets. However, it is unlikely that new supply will have a tangible impact on the current state of affairs.
In the following sections, we identify notable changes in rental demand, highlight market-specific trends, and discuss what the coming months may look like for the rental demand in Canada.
Top Canadian Cities in Demand
Notable Changes in Demand Over the Past Month
Demand scores are down month-over-month across the country with prospects and available properties declining nationally. Across our top 10 markets prospects are down +3.3%, active properties are down -2.5%, and average prospects per property are down approximately -1% month over month. This decline is reflective of conventional seasonality with the previous 2 years showing similar levels of decline throughout April. Total leads have declined at a higher rate than prospects; leads are down -4.35% which suggests that not only are there fewer renters actively looking for housing, but those who remain are submitting fewer leads.
Month-Over-Month (M/M)
- Primary: Demand scores are down -1.2%
- Secondary: Demand scores are up +2.4%
- Tertiary: Demand scores are down -1.5%
Month-over-month (M/M) National demand scores were down -0.9% in April 2024 compared with March 2024. April saw demand dip after March’s substantial growth and returned to conventional seasonal decline leading up to the summer leasing season.
Notable Changes in Demand Over the Past Year
Annual demand comparisons show an accelerating trend of declining prospect counts with each passing month, down -26.1% year over year, while active property counts have declined -10.9%. Although demand scores show positive growth of +19.7, this figure is not directly reflective of real-world conditions and instead reflective of the long-term shifts in average prospects counts which have changed how demand scores are calculated and display more favourable conditions in 2024.
Year-Over-Year (Y/Y)
- Primary: Demand scores are up +21.4%
- Secondary: Demand scores are down -6.0%
- Tertiary: Demand scores are up +18.8%
Year-over-year (Y/Y): National demand scores are up +19.7% in April 2024 compared with April 2023. Real demand by renters has declined year over year with total leads down -20.6%, while average leads per prospect are up +7.3% as those renters who remain on market are more motivated than ever to find affordable accommodations.
An Analysis of Key Canadian Markets
To provide a more detailed analysis of the rental demand in specific markets across Canada, we have segmented our market data into 3 key market segments.
- Primary (Populations Over 600K)
- Secondary (Populations Between 235-600K)
- Tertiary (Populations Between 100-235)
Examining these market segments individually offers a deeper understanding of demand patterns within larger population centers, and allows us to identify trends across markets.
Primary Markets (Populations >600K)
Primary Market Drill Down (M/M): April 2024 vs. March 2024
Notable Changes in Primary Markets Over The Past Month
*Overall demand scores are down -1.2% month-over-month, unique prospects are down -3.3%, and properties are down -2.1%.
Primary markets saw monthly declines which were in line with the broader national average, While also more dramatic than the monthly decline experienced in April 2023 of -2.6%. Primary markets are also representing a gradually diminishing proportion of total active renters at 72.3% down 11% from March suggesting that renters in primary markets are either disproportionately choosing to remain in place, or are choosing to look elsewhere for their next rental homes thus changing the distribution of renters in primary markets. Regardless of monthly declines, primary markets continue to represent the vast majority of both rental activity and properties which is not likely to change even in the face of declining prospect counts.
Primary Market Drill Down (Y/Y): April 2024 vs. April 2023
Notable Changes in Primary Market Demand Over The Past Year
*Year-over-year demand scores are up +21.4%, prospects are down -26.7%, and properties are down -12.9%.
Annual market comparisons highlight not only the disparity in market conditions throughout the first half of 2023 and 2024 but they also show the continued decline in leasing activity with each passing month's annual comparison showing greater declines in prospect counts and overall lead submissions. Active properties are similarly in decline; turnover rates have declined as more renters choose to remain in place in favour of moving and having to carry the burden of a higher monthly rent.
Secondary Markets (Populations ~235-600K)
Secondary Markets Drill Down (M/M): April 2024 vs. March 2024
Notable Changes in Secondary Market Demand Over The Past Month
*Secondary markets demand scores are up +2.4% month-over-month, unique prospects are down -3.4%, and property counts are down -5.7%.
Secondary markets fared the best in April with positive demand growth thanks to the inverse movements of prospects and properties which resulted in average prospects per property increasing +2.4% month-over-month. While the overall trend shows declining prospect counts, only 3 markets (Etobicoke, Hamilton, and London) experienced declining prospect counts in April, while the remainder of markets maintained an average +9.4% month-over-month increase in prospect counts. Unfortunately, property counts did not fare well with all but 2 markets (Halifax, and Oshawa) displaying declining property counts.
Secondary Market Drill Down (Y/Y): April 2024 vs. April 2023
Notable Changes in Secondary Market Demand Over the Past Year
*Overall, year-over-year demand scores are up +6.0% year-over-year, with prospects down by -31.1%, and properties down by -6.1%.
Secondary markets within our market segments show the highest annual decline in prospect counts which continues to accelerate with each passing month. Within the secondary market segment, only 3 markets show annual growth in active properties: Surrey +22.7%, London +7.6%, and Hamilton +2.8%; while the remainder of properties show declining property counts averaging -16.4% year-over-year.
Tertiary Markets (Populations ~100-235K)
Tertiary Markets Drill Down (M/M): April 2024 vs. March 2024
Notable Changes in Tertiary Market Demand Over The Past Month
*Demand scores in tertiary markets decreased by -1.5% month-over-month, unique prospects are down -2.4%, and available properties are down -0.9%.
Tertiary markets bucked their 2-month trend of growing prospect counts and are now showing declining demand in line with the rest of the country. Not all markets are experiencing this equally, with Sudbury being a notable exception where prospects increased +18.5% monthly. The remainder of the properties either showed minor improvements or declining demand.
This month saw little movement at the top end of demand rankings of tertiary markets with Sudbury being a notable exception having gained 4 spots this month.
Tertiary Markets Drill Down (Y/Y): March 2024 vs. March 2023
Notable Changes in Tertiary Demand Over the Past Year
*Overall, year-over-year demand scores are up by +18.8%, unique prospects are down by -24.1%, and available properties are down -7.8%.
Tertiary markets show the lowest relative annual decline in prospect counts relative to larger market segments and the broader country as a whole. Although this annual decline continues to increase with each passing month, it remains below average and suggests that these markets, while less in demand are more stable for renters. This decline as with larger market segments is likely to continue into the foreseeable future and is likely to be maintained below the national average.
Conclusion
April marked a downturn in rental demand following March’s strong growth, with active prospects declining -2.9% nationally and properties decreasing by -2.1%. This reversal effectively undoes much of the previous month's growth and contributed to an accelerated year-over-year decline in prospects of -26.1%, indicating a downward trajectory in long-term trends as we step further from the post-pandemic-induced influx of rental activity. The long-term decline in active prospects suggests that leasing activity will continue to be slower in the coming months, with the summer leasing season expected to be subdued relative to the previous two years.
Renters have reduced their online activity, indicating a more cautious approach to their rental searches likely fueled by growing market rents across much of the country. In the coming months, we expect rental activity to improve as we enter the summer months along with peak leasing season. Unfortunately, even with increased rental activity, we expect the overall trend to be depressed this year relative to the previous 2 years. When coupled with reduced turnover this may result in further accelerated rents as more renters compete for a dwindling supply of available rentals.
The dynamics of this year's rental market continue to evolve, with affordability concerns on just about everyone's minds, and supply constraints shaping not only renter behaviour but overall market conditions. We expect that this year's summer leasing season will be tougher for housing providers as competition for qualified tenants intensifies and only those properties that go above and beyond in offering renters a combination of the features they want, and the information they need; rise to the top. Despite the challenges posed by the current market conditions; maintaining focus on the visibility of your listings, and staying ahead of the curve will remain crucial for attracting and retaining quality renters in an ever-changing market.
Methodology
To present this data, Rentsync has determined three key calculations for each area of the report, They are as follows:
Demand Score: Our demand score is rated out of 10 (with 10 being the highest score a city can receive), and is calculated based on unique leads per property, per city, and compared against benchmark data.
For Example Burnaby, BC received a demand score of 6.5 this month, versus 6.3 last month. Burnaby experienced a 0.2-point increase in its demand score.
Demand Percentage (% +/-): This is determined according to the year-over-year (YOY) or month-over-month (MOM) increase or decrease in unique leads per property.
For Example The month-over-month demand scores in Burnaby, BC increased +3% in April 2024 versus March 2024. The year-over-year demand score in Burnaby increased by 0.8 points representing a 15% increase from April 2023.
Position: The position is determined by unique leads per property, with cities that have at least *20 properties or more. The position will vary depending on demand.
For Example This month, Burnaby, BC achieved the top spot on our Top Canadian Cities in Demand rankings while it was not included in last year's rankings due to not reaching the required minimum property count.
*This report provides month-over-month rental listing data for April 2024 versus March 2024 and a year-over-year comparison from April 2024 versus April 2023. It also outlines the month-over-month and year-over-year trends in primary, secondary, and tertiary markets.