Benjamin Straus

Renting has become significantly more expensive in Canada in recent years. Asking rents—those advertised for vacant units—rose sharply as demand grew faster than supply. As tenants move and sign new leases, changes in asking rents gradually spread to the average rents captured in the consumer price index.

In this note we examine how monetary policy affects housing demand, supply and prices in Canada, and whether these effects vary with labour market conditions

Strong population growth, low interest rates and robust investor demand drove an expansion in Toronto’s condo market over the past decade. But times have changed. Toronto’s condos are no longer providing substantial returns for short-term investors because population growth has eased and interest rates have risen. This is challenging the business models of condo builders.

We assess the impact of COVID-19 on consumption indicators by estimating the effects of government-mandated containment measures and of the willingness of individuals to voluntarily physically distance to prevent contagion.