Rental affordability crisis: Why has rent gone up in Calgary?

There is one major reason that rent is more expensive in Alberta – there are more of us that ever before.

Santhosh Nathan is an investor-focused realtor with EXP Realty that works with would-be landlords in the city.

“The reason why rent is going up, is that the population levels are booming in Alberta,” he explained. “Between Q4 2021 and Q4 2022 the net migration level was up 221 per cent just into Alberta – and that was 120,000 people who moved over the course of the year.”

The Calgary Affordability Task Force says in the next four years, Calgary is expecting 110,000 new residents, or 75 new people a day.

The population boom has meant Nathan is seeing more and more clients from out-of-province looking to buy investment properties in the city.

Nathan says the other two culprits driving up rent and home prices in Calgary, and Alberta, are out-of-province investors buying up supply, which increases housing prices, and investors depending upon variable rate mortgages.

Read more on Calgary’s rental affordability crisis: Rental affordability crisis: How much has rent gone up in Calgary? 

He says variable rate mortgages typically only carry a three-month interest penalty to get out of – making it easier to liquidate the asset.

And that means every time the Bank of Canada changes the interest rate, they have to chase that higher rate with higher rent.

The Bank of Canada just raised the mortgage rate for the fifth time this year, to 4.5 per cent – the highest rate since April 2001 – and experts say another hike could be on the horizon.

Often coming from an area with higher home prices to begin with, these investors have more buying power, making Calgary attractive and driving home prices up.

“They’re okay with negative cash flow because they’re used to this in other provinces,” said Nathan.

According to the Affordability Task Force, rent in Calgary has increased by 25 per cent over the last five years, while house prices have jumped 29 per cent.

This is the second in a five-story series by CityNews on rent affordability in Calgary. Follow along for more coverage on how the rising cost of housing is impacting Calgary and what is being done to address the problem.