Lured by low-interest rates and buoyed by a strong economy, more and more Canadians over the past two decades have opted to let go of their leases and buy homes, thereby driving up prices, according to a Statistics Canada report released Friday.

Unmoved by modest rental rates, the majority of Canadians have decided to buy homes, the report said. Three out of every 10 households rented in 2005, down from four out of every 10 in 1986.

Three out of every 10 Canadian households rented in 2005, down from four out of every 10 in 1986, according to a Statistics Canada study.
(CBC)

"Despite some economic slowdowns and a recession, the average family income increased by 11.5 per cent in real after-inflation terms from 1986 to 2004, leaving households with extra wealth for home purchases," Statistics Canada analysts Louis-Philippe Verenka and Don Little said in the report.

Consumer confidence swelled following the 1990-92 recession, pushing Canadians to seek out long-term investments including home ownership.

"By the mid-1990s, houses were relatively more affordable, given that interest rates had declined and that house prices had been dampened by the recession," the authors said. "As more homes were purchased in subsequent years, house prices rose, particularly in the 2000s."

The report said that every province except P.E.I. and Newfoundland and Labrador recorded a decline in renters. The largest number of homes were purchased in Alberta, Manitoba and Saskatchewan.

Renters have affordability problems, less selection

For renters and landlords, the departure of high-earning Canadians from the rental pool has resulted in some large shifts. While rental inflation rates have been modest, more renters have experienced difficulty covering their living expenses as compared with two decades ago.

According to the report, low-income families, single Canadians, city-dwellers and a growing number of seniors tend to be renters.

The study also noted that renters face fewer choices, as builders have focused less on rental units over the past two decades.

"Where 31 per cent of all housing construction was for rental units in the 1980s, this fell to an average of 23 per cent in the 1990s. Most of the increase in the rental stock has been from other sources such as the conversion of non-residential buildings into rental units," the study said.

Quebec and B.C. have the most households renting, while New Brunswick and Newfoundland and Labrador have the fewest renters. The rental market has grown most notably in B.C. because of high home prices coupled with rapid population growth.