The following is from ATB’s Daily Economic Comment dated April 4, 2013
Paying The Rent
For many Albertans renting an apartment or house is the primary shelter cost they pay each month. And while it seems like rents keep getting pushed up, the rising cost has not been out of line with general inflation.
In January of this year, the price index for rented accommodation in Alberta was 125.6, with the index based on setting prices in the year 2002 equal to 100. That means rents in our province, on average, are about 26 per cent more than they were in 2002. In the same month, however, the all-items consumer price index was 126.5. That suggests overall inflation has actually outpaced the price of rented accommodation since 2002.
This may come as a surprise to many Albertans who have witnessed their rents rising steeply over the same period. And indeed, because it is an average across the province, it’s not fair to say everyone’s rent has risen by only 25 per cent. Certain cities—especially those with fast growing populations—have seen apartment rents skyrocket.
During the boom years of 2007 and early 2008, the prices of rented accommodation rose sharply (see graph). That was due to the hot economy, a lot of inmigration and a great deal of apartment conversions to condominiums (which reduced the available supply of rental units). Rents actually came down a bit in 2009 and 2010, but resumed a steady increase last year.