Renting a small apartment downtown would seem the most cost-beneficial idea, especially for a university student commuting from two hours away. But covering monthly expenses goes out the window when you have to choose between paying your rent or buying groceries for the month. A one-bedroom apartment in Toronto requires a tenant to pay about $2500 and this is nearly a 23% increase compared to last year, according to CP24.
Vancouver and Toronto are currently the most expensive markets in Canada as the annual rent has risen over 24% in each of the provinces. Buttonwood, a property management company, states that there are multiple reasons behind this uncontrollable surge in rent and other living costs.
Firstly, the most obvious contender is inflation, and according to a report conducted in August, the inflation rate was about 7%. It’s nearly impossible for Canadians to expensive groceries, high-quality clothes or even gas for their cars as inflation burns a hole through their wallet. Along with the rising costs of essentials, homeowners complain about the rising mortgage payments and the difficulty in paying for their houses.
Chris Kolinksi, a mortgage broker interviewed by CBC says “[People are] struggling, right? And they need some relief and want their monthly payments to be lower. And so they're asking, how can I get my payment lower? If that's even an option right now".
The consensus among Canadians seems to link the rising mortgage payments to the rise in rental rates, however, Buttonwood reports that supply and demand are more closely linked to the rise in rent.
Although the average inflation rate has decreased, it is still difficult for people to make their monthly payments. By the end of September, the inflation rate was around 6.9% and around 8% yearly, however, economic growth has only been a little over 5%.
According to a poll conducted by RBC, financial uncertainty might become the new norm for many Canadians with the current rates of inflation. 77% of the poll’s responders said that they are not able to save as much as they want and another half state that they have never been more stressed over money.
If the pressures from inflation continue to 2024, 72% of the poll’s respondents are afraid of taking on more debt, while 21% say that they might have to come out of retirement to make ends meet.
Those who are currently renting apartments in Toronto are looking for roommates to split monthly costs with, almost all Canadians are cutting back on spending and some might even cut back on holiday shopping this year as Black Friday approaches on Nov. 24.
What was once a time of thrilling spending and buying presents to wrap and keep for another month for loved ones has now become a time of frugal spending and a lot of second-guessing.
The BMO Real Financial Progress Index found that 78% of respondents will be buying fewer gifts and 26% of respondents will be cutting down the list of people they will be giving gifts to this year. Nevertheless, it seems the main concern during the holiday season for most Canadians is the post-holiday bills that will rack up. On average, it is believed that it will take around 3 months to pay back holiday bills, and about 24% of Canadians state that they are not confident they will be able to pay their bills back on time.
While inflation may be cooling down, it seems that living costs are still a living hell for Canada especially those in hotspots such as Vancouver or Toronto. Many anticipate the economic future of the country as 2024 approaches, but most hold on to their wallets in fear.
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