London rents rise at slower pace amid cap on foreign students

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A move by Ottawa to cap international student permits appears to be bringing some relief to renters in college towns across Ontario, though the effect isn’t being felt as strongly in London yet, new figures suggest.

Average asking rents across Canada grew in September by an annual rate of 2.1 per cent to $2,193 a month, the smallest percentage increase since 2021, according to the latest rental market report by Rentals.ca, a website used by landlords to advertise their units.

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But several college towns, which each year grapple with the added demand for housing brought on by post-secondary students, saw rents stay flat or rise by margins below the national rate last month.

It suggests the drop in international students may be easing demand in some of these cities and bringing some balance to these markets, said Mike Moffatt, an economist at Western University’s Ivey business school who studies housing trends.

The federal government, facing criticism over its immigration policies and a dramatic increase in the number of international students admitted to Canada, moved in January to cut the number of student permits it issued by 35 per cent starting with the 2024 school year.

Last month, Ottawa announced a further reduction of 10 per cent for 2025, which would result in about 437,000 study permits issued next year.

These are the rates of rent increases for all types of properties, according to Rentals.ca’s report:

• Hamilton: 6 per cent
• Windsor: -2 per cent
• Guelph: 0 per cent
• Kitchener: 0 per cent
• Kingston: 0 per cent
• Waterloo: 2 per cent
• St. Catharines: 3 per cent

London, however, saw asking rates go up by five per cent in September, with the average for one- and two-bedroom units now sitting at $1,804 and $2,226 respectively.

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According to Moffatt, a couple of factors could be at play in keeping London’s pace of rent increases above the national average: colleges appear to have been more impacted than universities and London isn’t home to many “satellite” or private colleges, which were often used by international students as a way to get Canadian education and a path to permanent residency.

“Where we’re seeing the biggest drops in rent are in communities that have a lot of satellite campuses, so that’s your Toronto, your Brampton, your Oakville,” he said. “But there wasn’t much of a change at the university level.

“We also don’t have that level of the sort of purely private colleges, and those are the institutions that are, by far, seeing the largest decline in students,” he added. But “in London, we are not seeing much of a difference in private college enrollment.”

Moffatt also said it doesn’t mean London isn’t also benefitting from the change.

“In previous years, rents were going up in (London) by about 15 per cent a year,” he said. “Now, it’s less than three per cent (for one-bedroom units), so I think it is making a difference, even if we’re not seeing rent to actually go down, they’re going up at a lot slower than they were.”

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And London also remains an attractive destination to many other people besides students, said Rentals.ca’s Giacomo Ladas.

He said medium markets such as London continue to see an influx of renters moving from the Greater Toronto Area and other more expensive markets, which fuels local demand.

When the average asking price for rents in places such as Vancouver or Mississauga hovers closer to $3,000, the $2,088 in London become more appealing, Ladas said.

“London’s also kind of becoming a secondary market where people who would otherwise live in the Torontos, the Mississaugas, the Oakvilles, are now moving into London because renters’ preferences are changing and work-from-home is still up,” he said.

“So, London is still a desirable place to live.”

jjuha@postmedia.com

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