Yahoo Finance Rising rents making Canada's cities less affordable but still attractive to international workers
'When you plot quality of living versus cost of living, Canada always winds up in that really nice quadrant'
Canada’s major cities mostly became less affordable in the past year, but they remain highly attractive to international workers due to their high quality of life, according to an annual cost-of-living report.
Fast-rising rents had a negative effect on affordability in four of five Canadian cities covered by the Cost-of-Living City Ranking by Mercer, a global financial services firm. All five cities — Calgary, Montreal, Ottawa, Toronto and Vancouver — landed roughly in the middle of the 226 cities ranked.
“When I think of Canada sort of being in that 100 rank, I think it's a good compromise,” Vince Cordova, Mercer’s North American mobility advisory lead, said in an interview with Yahoo Finance Canada. “In some respects, it is a more equitable compensation system that really lifts the experience for everyone who lives in those cities.”
Hong Kong, Singapore and Zurich were the most expensive cities in the ranking, which can be understood as a consumer price index for cities. It compares the U.S. dollar cost of various goods, services and rent for a comfortable and safe apartment in various places, and focuses on an international worker being able to work in a global context. Cordova notes that the ranking doesn’t include things like local wages, taxes or whether or not healthcare is subsidized — all of which can be significant factors in affordability.
Toronto is the costliest city in Canada, according to the ranking, though it dropped slightly to 92 from 90 last year. Vancouver (101), Montreal (118), Ottawa (126) and Calgary (141) became less affordable, rising between four and 17 spots this year. The Canadian cities’ movements were driven largely by trends in rent, Cordova says.
“We've seen more upward pressure on rents, particularly in Vancouver and Montreal, which explains why they jumped so many places on the list,” he said.
According to Rentals.ca data, average rents in Toronto dropped slightly year-over-year in March (the time period for Mercer’s ranking), but jumped by six per cent or more in Vancouver, Montreal, Ottawa and Calgary. Inflationary pressure on rents has been a persistent issue in Canada, with the latest CPI data from Statistics Canada showing an 8.9 per cent year-over-year increase on the national rent index in May.
There are signs that the trend will continue. Many economists expect housing affordability to remain problematic in Canada for years to come. Population growth — with international workers among the non-permanent residents driving record gains — has been outpacing new housing stock, and low vacancy rates have spurred intense competition for rental units.
In spite of the Canadian cities becoming relatively more expensive, they remain highly attractive destinations for international workers due to the quality of life they offer, Cordova says. In Mercer’s other annual city ranking on quality of living, all five Canadian cities are in the top 25.
“When you plot quality of living versus cost of living, Canada always winds up in that really nice quadrant, which is, it can be affordable from a global perspective, and it offers a high quality of living,” Cordova said.
“The U.S. is more attractive because our salaries are higher and our taxes are lower. But you know, the cities themselves offer a lot of challenges and I think north of the border, the cities are a little different.”
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android.
