When Ivana Perkucin was an undergraduate student at Western University three years ago, she was paying $500 a month for a rental unit in London, Ont.
After moving to Toronto in 2020, where the 25-year-old is currently a biomedical engineering PhD student at the University of Toronto, her rent more than quadrupled.
Perkucin and her partner, a young working professional, paid $2,200 a month for a 500-foot, one-bedroom apartment.
That was just for the first year of their tenancy.
Following a rent hike in 2021, their monthly payments rose to $2,600 — nearly $1,200 more than the average price of a one-bedroom apartment in Toronto in 2021, according to the data from the Canada Mortgage and Housing Corporation.
But for the hundreds of thousands of students across the country, many of whom earn little or no income, it’s not uncommon for them to be spending more on rent than the general population.
A recent report by Unité de travail pour l’implantation de logement étudiant (UTILE), a Québec affordable student housing non-profit organization, found students are paying 25 per cent more for housing than the average Canadian renter, largely because many post-secondary institutions are located in dense urban centres — and often in some of their most unaffordable neighbourhoods.
As Canada’s rental market continues to heat up — in July, the average cost of rent was up 10.4 per cent year-over-year, according to Rentals.ca — housing experts and financial planners warn the student housing crisis, fuelled by the lack of dedicated student accommodations, is drastically increasing student debt and threatening the accessibility of higher education.
The issue also implicates the wider housing market, experts say, as the lack of affordable housing for students is forcing many to compete with working professionals and young families for prime real estate, further driving up rental prices.
“The lack of student housing is eroding the availability of affordable rentals in all major Canadian cities,” said Laurent Levesque, executive director of UTILE. “If we don’t build more, we’re going to be feeling that squeeze for a long time and it’s going to have negative impacts on students, post-secondary institutions, the broader rental market and other low-income households.”
Perkucin, who with her partner moved to a two-bedroom apartment in July following the significant rent hike at her old unit, allocates more than 50 per cent of her monthly income towards rent.
Most financial experts agree the ideal rent-to-income ratio is 30 per cent. Beyond that, renters are often under financial stress and will be forced to cut back on other expenses.
But that’s the case for the vast majority of student renters in Canada. Seven in 10 individuals surveyed by UTILE said they spend more than 30 per cent of their total income on rent. In Toronto and Vancouver, the average student allocates more than half of their income toward housing.
For Perkucin, the affordable housing crisis is leaving her with little hope.
“We’re not contributing the same monthly income towards our savings as we are to rent, so it becomes impossible to even fathom how we would eventually buy a property,” she said, speaking about her and her partner’s financial situation.
“It makes us nervous because we both love the city and I would like to live the majority of my life in Toronto. But it just doesn’t seem like the most practical and feasible option.”
The student housing crisis stems from a lack of purpose-built student residences, experts say. In a 2021 report, Bonard, a market research firm specializing in student housing, estimated there are nearly 1.6 million full-time post-secondary students in Canada but only 200,000 beds at purpose-built student residences.
While some students choose to live at home, others who can’t secure a student residence unit are forced to search for housing on the wider rental market, competing with young families or working professionals, who are often more appealing to landlords as they tend to have more extensive credit and employment histories.
As Toronto’s rental market continues to tighten — vacancies in purpose-built rentals hit 1.4 per cent in the second quarter of 2022, down from 5.1 per cent last year — many students unable to secure housing have turned to homeless shelters.
In 2019, 26 per cent of the residents of Covenant House Toronto were students, of which half were college or university students. Today, the youth shelter estimates students comprise a third of its clients, a figure that may rise as rents soar.
“It’s very much a trend that has mirrored the affordability issues with rental housing in Toronto,” said Mark Aston, Covenant House’s executive director, in an interview with Bloomberg.
Amrit Walia, a sales representative with Royal LePage Signature Realty, said this summer is a “perfect storm” for the city’s rental market.
“The city is opening up from COVID, so there’s a pent-up demand with people moving back to the city,” he said. “Universities are also opening up at the same time. Plus, the rising interest rates have forced buyers to put their goals of purchasing a home on hold and lean toward renting.”
Janet Gray, a certified financial planner with Money Coaches Canada, believes the onus should be on post-secondary institutions to construct purpose-built accommodations for students.
“If they want to attract students, they have to make sure there’s housing available,” she said. However, Gray also acknowledged it’s challenging for educational institutions to predict future housing trends, with some hesitant to approve new developments out of concern they may not be able to turn a profit.
Earlier this year, Toronto Metropolitan University scrapped plans to build a highrise residence downtown that would have housed nearly 600 students, citing “drastic” increases in construction costs. The local interim councillor, Robin Buxton Potts (Ward 13, Toronto Centre), at the time called the decision “short-sighted.”
Levesque believes universities and colleges risk losing international students — almost all of whom rely on rental housing — if they fail to invest in dedicated student accommodations.
In recent years, universities have become increasingly reliant on international tuition fees as a source of funding. The average undergraduate tuition for an international student has risen from $27,613 in 2018/19 to $36,123 in 2022/23, while domestic undergraduate tuition has hovered below $7,000 for the past four years, according to Statistics Canada.
“We’ve been investing heavily in attracting more international students and encouraging students mobility between provinces,” said Levesque. “All of this induces demand for student housing and we haven’t been taking that into account in campus development and housing investments.”
With files from Bloomberg
Joshua Chong is a Toronto-based staff reporter for the Star. Reach Joshua via email: firstname.lastname@example.org