Skyrocketing Rent Across Canada Leaves First-Time Homebuyers Struggling to Save
Prospective homebuyers who rent should consider Quebec City, as you can save 10% for a home deposit in just under three and a half years. Data revealed the best and worst major Canadian cities for homebuyers based on financial factors – Vancouver ranks lowest. Toronto is the worst city for renting while saving up for a home, with residents spending 48.5% of their annual income on rent.
Overview
A recent analysis conducted by money experts at Money.ca revealed which major Canadian cities offer the most affordable options for prospective homebuyers. The study assessed rent affordability, and the time required to save for a home deposit. Researchers used average one-bedroom rent prices and annual income data from Statistics Canada to calculate the percentage of income spent on rent.
For home prices, researchers used data from CREA to estimate the time needed to save for a 10% deposit on an average-priced home. They applied the 50-30-20 rule to determine monthly savings and ranked cities by the time required to save.
Best Cities for Renting While Saving for a Home
Quebec City is the best choice for prospective homebuyers looking to rent while saving for a home. The average monthly rent for a one-bedroom unit is just $911 CAD, while the average annual wage is $50,500. This means residents only spend 21.65% of their annual income on rent, making it an ideal location for saving. This is 37% below the average spend across Canada, as a typical Canadian spends 34.5% of their annual income on rent.
Montreal ranks as the second-best city for renting while saving to buy a home. The average monthly rent for a one-bedroom unit is $960, while the average annual income is $43,800. Tenants spend 26.3% of their earnings on rent.
St. John’s, NL ranks as the third-best option for renting while saving for a home. The average monthly rent is $904, and with an annual income of $39,100, residents spend just 27.74% of their earnings on a one-bedroom unit.
Top 10 Major Cities with the Best Affordability for One-Bedroom Rentals
| Rank | City | Average Annual Income | Average Monthly Rent | Percentage of Annual Income Spent on Rent |
|---|---|---|---|---|
| 1 | Quebec City | $50,500 | $911 | 21.65% |
| 2 | Montreal | $43,800 | $960 | 26.30% |
| 3 | St. John’s | $39,100 | $904 | 27.74% |
| 4 | Regina | $43,900 | $1,084 | 29.63% |
| 5 | Windsor | $42,700 | $1,055 | 29.65% |
| 6 | Edmonton | $45,800 | $1,133 | 29.69% |
| 7 | Moncton | $40,100 | $998 | 29.87% |
| 8 | Saskatoon | $43,900 | $1,104 | 30.18% |
| 9 | Winnipeg | $42,300 | $1,102 | 31.26% |
| 10 | Ottawa-Gatineau | $49,500 | $1,350 | 32.73% |
Worst Cities for Renting While Saving for a Home
Toronto is the worst major city for prospective homebuyers to rent in, with an average one-bedroom rent of $1,691 per month. Since the average annual income for Toronto residents is $41,800, this means renters spend 48.55% of their income on rent, leaving little room for savings.
Vancouver is the second worst place to rent while saving for a home. The average rental rate of a one-bedroom unit is $1,697. Given the average annual income is $44,200, this means Vancouver residents spend 46.07% of their earnings on rent.
Halifax, NS is the third-worst city in terms of rent affordability, with an average monthly rent of $1,322 for a one-bedroom unit. Since the average annual income is $38,700, tenants spend 40.99% of their earnings on rent.
Top 10 Major Cities with the Worst Affordability for One-Bedroom Rentals
| Rank | City | Average Annual Income | Average Monthly Rent | Percentage of Annual Income Spent on Rent |
|---|---|---|---|---|
| 1 | Toronto | $41,800 | $1,691 | 48.55% |
| 2 | Vancouver | $44,200 | $1,697 | 46.07% |
| 3 | Halifax | $38,700 | $1,322 | 40.99% |
| 4 | Kelowna | $43,900 | $1,479 | 40.43% |
| 5 | Oshawa | $42,700 | $1,397 | 39.26% |
| 6 | Victoria | $43,900 | $1,427 | 39.01% |
| 7 | Hamilton | $42,700 | $1,366 | 38.39% |
| 8 | Kitchener | $42,700 | $1,342 | 37.71% |
| 9 | Calgary | $48,000 | $1,463 | 36.58% |
| 10 | St. Catharines | $42,700 | $1,224 | 34.40% |
Fastest Home Deposit Savings Time
By applying the 50-30-20 rule to monthly income, researchers estimated the time prospective homebuyers will need to save for a 10% deposit in each city.
In Quebec City, it will only take 3.4 years to save for a 10% deposit on a typical home, making it the quickest city to reach this milestone.
Regina is the second fastest, taking just over three and a half years to save a 10% deposit.
Edmonton is the third quickest, where it will take just 4 years to save for a 10% deposit.
Longest Home Deposit Savings Time
Toronto ranks as the slowest city to save for a 10% deposit, taking 7.3 years.
Vancouver is the second slowest, taking just under 7 years to save a deposit.
Kelowna is the third slowest, taking over 6 years to save a deposit.
Data Sources
The data in this report comes from Money.ca, Statistics Canada and CREA, based on analysis of rent costs and income data across Canada’s major cities.
