Canadian multi-residential market overview

Why Canada?

Canada's resource-rich economy, prudent banking regulations and well-capitalized financial sector contribute to its resilience and sustained growth.

Since the Global Financial Crisis (GFC), Canada has consistently outperformed its G7 peers in various economic indicators making it an attractive destination for capital.

Structurally undersupplied housing

Most Canadian provinces have an acute shortage of housing relative to population.

Development activity has not kept pace with the increase in the demand for housing over the past two decades. A consistent undersupply of new construction over the past 20 years has resulted in Canada having the lowest proportion of housing stock to population of the G7 economies which could signal untapped demand for apartments.

Increasing influx of immigrants

Higher immigration targets to bolster economic growth.

Canada has boosted its target immigration levels for 2022-2024, across its various provincial and federal programs. The influx of new households and corresponding increase in demand for living options, will further boost multi-family demand.

Housing starts to lag population growth

Single family and multi-family housing development will remain muted over the near term.

While housing starts will remain broadly in line with to their long-term average, economic uncertainty will slow activity in the near term. Oxford Economics forecasts markedly lower development levels per capita over the next decade, which will exacerbate the imbalance in top-level demand-supply fundamentals.

Multifamily fundamentals

Canada's multifamily sector has exhibited remarkable strength and resilience throughout the pandemic and more recent economic downcycle, as evidenced by rock bottom vacancy rates and accelerated rent growth.

At the end of 2022, the Canadian multifamily sector had fewer apartments available to rent than at any time since 2001. This further solidified the sector's strength and attractiveness.

Dec-22 1.9% | 5 Yr. Avg. 2.6% | 10 Yr. Avg. 2.9%

Dec-22 $1,206 | 5 Yr. Avg. 7.3% | 10 Yr. Avg. 27.3%

Demand continues to outpace supply

Canada's growing population and muted supply response has resulted in tight multifamily markets across the country.

Purpose-built rental inventory continues to experience insignificant growth with an expected shortfall of over 1M units over the next decade. To close the gap, developers would need to add more than double the expected apartment supply by 2032, suggesting multifamily fundamentals will remain strong well into the future.

Forecast assumptions:

  1. Forecast demand for rental housing: Projected population increase x percentage of renter household in 2022
  2. Purpose Built Rental Supply: Average apartment supply in last 3 years x 10-year period
  3. Condo Rental Supply: Average condo used for rental supply in the last 3 years x 10-year period