Rental Market Trends in Ottawa: Increasing Demand and Rising Prices

The rental market in Ottawa, Canada, is facing significant challenges due to the high level of immigration and the limited availability of affordable housing. As a result, competition for rental properties has intensified, with landlords often receiving offers above their asking prices. In this article, we will delve into the latest market trends and their potential impact on both tenants and homeowners in Ottawa.

Rental Volume and Pricing

According to recent data from the local MLS, Ottawa Realtors rented a total of 531 properties in May, marking a slight increase from the previous month. Rental volume has seen a year-over-year growth of 2.1%. The average rental price in May was $2,662, showing a 1% increase from the previous month but remaining relatively flat compared to the same period last year. The median rental price rose to $2,500 from $2,450 in the previous month.

Low Inventory and Increased Competition

Currently, Ottawa has a rental inventory of only 0.9 months, which translates to approximately 27 days. During the summer months, inventory tends to reach an all-time low, exacerbating the competition among prospective tenants. The city receives a significant influx of inquiries from individuals and families seeking to immigrate to Canada, particularly Ottawa. This high demand for rental properties suggests that the market will continue to be fiercely competitive.

Challenges for Tenants

Prospective tenants in Ottawa face various challenges in securing a rental property. Many homeowners and their agents request multiple months of rent upfront, even from tenants who have secure employment, substantial savings, and a reliable guarantor with good credit. In May, rental properties were typically leased within 23 days, a decrease from 28 days in April and 26 days in May 2022. It is anticipated that the time on the market will further decrease to 20 days in the coming months, highlighting the urgency for tenants to act promptly and be well-prepared when applying for a rental property.

Rental Prices Across Canada

According to the May 2023 Urbanation report, average asking prices for rental properties across Canada have shown a notable increase compared to the pandemic lows of April 2021. Nationally, the average asking price reached $2,002, marking a 20% rise or an additional $340 per month. For one-bedroom units, the average price was $1,811, reflecting a 1% monthly increase and a 15.54% year-over-year increase. Two-bedroom units had an average price of $2,239, showing an almost 1% monthly increase and a 14% year-over-year increase.

Ottawa Rental Prices

Focusing on the City of Ottawa, the average asking price for a bachelor unit in May was $1,640, representing a 17.6% year-over-year increase. One-bedroom units had an average asking price of $1,956, reflecting a 13.8% year-over-year increase. Two-bedroom units had an average asking price of $2,386, indicating an 18.7% year-over-year increase. Finally, the average asking price for a three-bedroom unit was $2,500, showing a 7.7% year-over-year increase.

Tips for Prospective Renters

Given the competitive rental market, it is advisable for individuals searching for rentals to act promptly and be well-prepared. This includes not delaying property visits, having rental application forms filled out in advance, and having necessary documents such as recent pay stubs, credit reports, and photo IDs readily available. Seeking assistance from experienced real estate professionals can also streamline the search process and increase the chances of securing a desirable rental property.

Efforts to Expedite Development Approval

Recognizing the need to address the lengthy approval process for development projects, the City of Ottawa has taken steps to expedite the review and streamline the application process. In order to meet new provincial timelines outlined in the More Homes for Everyone Act, the city plans to raise fees charged to developers, enabling them to hire additional staff and conduct more meetings. They also aim to implement a multi-tiered pre-consultation process.

To meet the increased workload, the city estimates the need for an additional 37 full-time equivalent positions, which would cost around $5 million. The funding for these staffing costs will be generated through increased service fees. The objective is to attract highly skilled staff and ensure that applications are processed efficiently and within the specified timelines. However, there are concerns that these changes may result in reduced scrutiny of some applications, potentially impacting the quality of development projects.

As part of the new initiatives, the City of Ottawa aims to reduce the review time for site plan applications and zoning bylaw amendments from an average of nearly 200 days to just 60 days. The goal is to expedite the approval process and encourage the construction of new residential dwellings in the city.

The rental market in Ottawa continues to face challenges due to high immigration rates and limited affordable housing options. With increased competition, tenants often find themselves paying higher rents and encountering stricter application requirements. Rental prices have shown an upward trend, both nationally and within the city, contributing to the urgency for prospective tenants to secure suitable accommodations promptly.

In addition to the rental market dynamics, the City of Ottawa is taking proactive measures to expedite the approval process for development projects. By implementing changes to the application process and investing in additional staff, the city aims to meet provincial timelines and promote the construction of new homes.

For individuals searching for rental properties in Ottawa, it is crucial to act quickly, be well-prepared with necessary documentation, and consider seeking assistance from experienced real estate professionals. Staying informed about market trends and being proactive can help tenants navigate the competitive rental landscape successfully.

Ultimately, these ongoing developments and initiatives within the Ottawa rental market will shape the experiences of both tenants and homeowners in the city. It remains to be seen how the market will evolve in response to the demand for rental properties and the city's efforts to streamline the development approval process.