Royal Bank expected in a new report issued today, Wednesday, that the shortage of rental housing in Canada may quadruple to 120,000 units by 2026, unless a strong batch is built.

Canada will need to add 332,000 rental units over the next three years, an increase of 20% over the 70,000 units built last year, to reach the optimal vacancy rate of 3%.

It is noted that the rental housing stock increased in Canada by 2.4% in 2022. This increase is estimated at 7.4% in Calgary, 5.5% in Ottawa and Etino, 2.1% and 1.4% in Toronto and Montreal respectively.

Also, according to Royal Bank, the slow growth in the two most populous cities in Canada has been outpaced by rapidly increasing demand, partly due to rising immigration levels.

The vacancy rate in Canada fell in 2022 to its lowest level in 21 years, at 1.9%.

Competition for housing also led to the largest annual increase in rental growth recorded, at 5.6% for the two-bedroom unit.