Rents in Alberta Growing Fastest in Canada

With Alberta’s population increasing at a rapid pace, housing inventories are tightening up, resulting in affordability challenges across the province. So, it is no surprise that rent prices are growing faster in the Western province than in any other place in the country.

According to the latest figures from Rentals.ca, the average rent for a one-bedroom unit rose 0.9 per cent month over month to $1,711. This is also up nearly 10 per cent from the same time a year ago. The average rent for a two-bedroom unit was unchanged from the previous month at $2,073. However, this is up eight per cent year over year.

While Edmonton remains one of Canada’s most affordable rental markets, the numbers are trending higher. The average price for a one- and two-bedroom in Edmonton was $1,312 and $1,639, respectively, in February.

By comparison, the average rent price for a one-bedroom apartment at the national level was just under $2,000 last month.

“Alberta maintained its lead as the province with the fastest growing rents, with total average asking rents for apartments up 20.0% annually in February,” the report stated.

In addition, among the top 25 small-to-mid-sized rental markets for annual rent growth, six were concentrated in Alberta. Additionally, the province had the second fastest city for rents nationwide: Lloydminster, which surged nearly 26 per cent.

Why Are Rents in Alberta Surging?

With greater competition for fewer homes, prices will inevitably venture upward. When more people are priced out of the home-buying market, they will vie for shrinking rental units.

Alberta is experiencing multiple developments that have exhausted affordable options and exacerbated low vacancy rates throughout the province. One of these is that Alberta is the fastest-growing province in Canada.

In the third quarter of 2024 (the latest figures), the provincial population reached 4.8 million, up more than four per cent from the fourth quarter of 2022. The experts are noticing the increase and anticipate that Alberta’s population will top five million by as early as 2025.

“In percentage terms, the last time population growth [for Alberta] was this high, Stars on 45 and John Lennon were topping the charts. For music buffs, that’s 1981, when the population grew 4.6 per cent,” wrote ATB Financial’s research team in a note in September 2023. “In people terms, however, no other year comes close. This year’s increase in the total population outmatches the previous record in 2013 by 77,800.”

How did this happen? Some believe the province’s recent “Alberta Is Calling” marketing campaign was the chief culprit. The advertising initiative lured many people into the province, especially households attempting to flee the ultra-expensive urban centres of Toronto and Vancouver, two cities that are in the middle of housing affordability crises.

Glowing economic prospects have also bolstered Alberta’s appeal. According to a recent TD Economics forecast, Alberta will continue to grow “at a faster rate than most Canadian jurisdictions in 2024,” underpinned by a supportive commodities backdrop, population growth, and a tight labour market. Plus, from a public policy perspective, Alberta will be the least indebted province, and its debt-to-GDP ratio is predicted to plunge below eight per cent by fiscal years 2026-2027.

At the same time, the benefits of living in the province could also lead to turbulence in the Alberta real estate market.

According to the Alberta Real Estate Association (AREA), housing inventory levels declined more than 21 per cent year-over-year to 12,277 units in February. Months of supply, which gauges the number of months it would take to exhaust current inventories at the present rate of sales activity, tumbled close to an annualized rate of 40 per cent to 2.1 months.

A recent survey found that roughly one-quarter of Alberta residents plan to buy a home in 2024 because of affordability. With interest rates on the cusp of being slashed, which could reignite a fire-and-fury environment in the Canadian real estate market, prospective homebuyers might want to get their feet in the door before the situation spirals out of control.

AREA data show that the total residential average price was a little more than $482,000 in February. However, prices vary across the province. In Calgary, the average sales price was $546,000 in 2023, and in Edmonton, the average home price was $400,287 last year.

“What I mean by that is Edmonton and Calgary are the only two cities where home affordability is still better than it was in the 1980s — not the case elsewhere in the country,” Stéfane Marion, chief economist with the National Bank of Canada, said in an interview with CBC News.

Conversely, the national average home price was nearly $686,000.

Meanwhile, local real estate association heads are already noticing the robust activity heading into the busy spring buying season.

“Edmonton real estate market is off to a good start for the year, with strong sales and prices compared to last year,” said REALTORS® Association of Edmonton 2023 Board Chair Melanie Boles in a recent report. “But we’ll be watching our inventory very closely leading up to the spring market. We want enough new listings available to meet the demand that is clearly there.”

Is Alberta no longer Canada’s best-kept secret?