A new report from RBC says even though rental housing construction in Canada has picked up significantly, more is needed to fill the demand backlog.

RBC economist Rachel Battaglia says rental housing starts reached their highest levels in decades in 2022 and 2023, with more than 80,000 new units started each year.

That number is set to rise even higher in 2024 thanks to demand as well as new policy measures incentivizing developers.

Battaglia says rental housing has become increasingly popular due to demographic shifts and the unaffordability of home ownership.

She notes a severe imbalance in rental housing supply and demand has caused rent prices to soar, with annual rent growth in 2023 outpacing both inflation and wage growth.

She says the government has responded with rule changes and incentives to promote high density and rental housing construction.

This report by The Canadian Press was first published July 3, 2024.

The Canadian Press