The Continuous Increase in Housing Prices
The rental market is continuing to see an increase in house prices as the months go by. Two new Fredericton landlords, who are also alumni of the University of New Brunswick know the stress of finding affordable housing. For them, seeing the high demand for housing is concerning.
There are many reasons why rent prices are so high; from developers choosing not to develop new units, to a tightened and expensive building supply chain.
The November 2022 rent report showed that “rents continued to surge across Canada during October, rising 11.8% year over year to an average of $1,976 across all property types.”
For current and future university students finding affordable housing has become stressful, especially now that it’s winter and COVID is still floating around.
New Fredericton landlords Matt Branton and Sunehra Karim know the feeling.
“Obviously, of course, it’s an awful, awful situation,” says Branton. “It’s pricing many people out of homes and affecting the youth and affecting the elderly. Most importantly, those who are more vulnerable and have a lower income.”
Branton says it’s a very complex situation with many variables.
“Developers are desensitized across the board in New Brunswick at least, to not develop multi-family units. Taxation laws that are outdated promote only single-family dwellings, so you’re taxed more than an apartment building. The building supply industry never fully recovered from the 2008 crash, so with COVID restrictions on top of that tightened supply chain, supplies that do make it to market are overpriced. When you develop an apartment building you have those taxes and this additional cost from the materials.”
Increased real estate value is another main contributing factor to why rental rates in Canada are skyrocketing. The cost of rent generally correlates with the value of the property that’s being rented. Expensive buildings generally come with a higher monthly rent.
Branton says, “It only makes it profitable to build a high-end apartment, which prices many people out. People come to this province and are buying houses and the demand has gone way, way up, but now it’s on the flip side. Interest rates are going way up and people are going to stop buying, but the demand is still there for housing so the rental war is on right now.”
Owning a rental house near the University of New Brunswick and St. Thomas University gives Branton and Karim hope that they will be able to benefit students who need affordable living.
“For us, the space was available. We had extra space that we didn’t need, so we figured obviously of course it was an opportunity and we can help someone out as well. We live next to the universities, so it was a pretty clear-cut decision,” says Karim.
Branton and Karim agree that all living spaces should be up to code when renting out to tenants.
“We had to get the apartment up to code, which included installing an egress window, proper ventilation, and installing fire extinguishers, carbon monoxide, and smoke detectors, ” Karim lists.
As stated by the Government of New Brunswick and as part of legislative changes made by Jill Green, the minister responsible for housing, the rent cap of 3.8 percent that was announced in March earlier this year will end on December 31st.
It’s unsure of what the rental market will look like in the near and distant future. Hopefully, rent prices will decrease soon. Only the government’s next decisions and time will tell.