VANCOUVER -- Rental prices have dipped and landlords are facing stiffer competition for tenants in Canada's two hottest housing markets in the fallout from the COVID-19 pandemic.

It seems like a renter's market in Toronto and Vancouver for the first time in years, but the B.C. Non-Profit Housing Association warns that doesn't mean housing is becoming more affordable.

It's monitoring the role of pension funds and real estate investment trusts, or REITs, which tend to spur rent increases in order to return value to shareholders, said policy manager Brian Clifford.

The non-profit association is advocating for a provincial fund to help its members acquire rental buildings when they come up for sale in order to keep the units affordable.

For now, some landlords are offering incentives, hoping to fill their units as fewer international students seek housing this fall, said Michael Ferreira, managing principal at Urban Analytics.

In the newer, purpose-built rental buildings the real estate advisory company tracks across British Columbia's Lower Mainland, incentives could include discounted rents, waived security deposits, and free parking, storage or utilities for the first year of tenancy.

And in Toronto, home broker and landlord Davelle Morrison said short-term rentals, such as Airbnb units, are entering the long-term mix as the pandemic continues to restrict and deter travel.

"We're finding that (rental units) are sitting on the market a lot longer and my clients are having to bring their rental prices down in order to generate any interest for their particular condo," said Morrison, adding she recently listed a unit she owns for the same price she set two years ago.

The latest numbers from the listing service PadMapper show the cost to rent in Toronto and Vancouver continued to decline in the last month, while smaller, neighbouring cities saw increases.

The company pegged the median cost of a one-bedroom apartment in Toronto at $2,100, down 8.7 per cent from last August, while the cost in Vancouver was down 6.4 per cent to $2,060.

The costs to rent a two-bedroom unit were also down, according to PadMapper's latest rent report that used around 10,200 listings in Toronto and 1,400 in Vancouver to estimate the median prices.

PadMapper doesn't provide a complete overview of the rental market, cautioned Ferreira, since not all purpose-built rental developers are looking for tenants by listing their units on such websites.

But he said the PadMapper data could offer a better idea of what's happening in the condo rental market, as landlords who buy condos as investments may be more inclined to use the site.

"They don't want to go a month or two without getting any rent in, so they're more willing to accept a lower rent or drop the rent on their unit in order to get a tenant in there."

The owners of purpose-built rental buildings are more likely to offer incentives that effectively reduce the tenant's costs without cutting into the monthly price, said Ferreira.

Tempting though it may be to believe competition among landlords bodes well for tenants, Clifford said the housing affordability crisis will continue as the end of government supports, such as the Canada Emergency Response Benefit and B.C.'s Temporary Rental Supplement, draws near.

A survey of 400 renters by the Vancouver Tenants Union that included people from across B.C. found 32 per cent of respondents believed they were at risk of falling into debt once those government supports end and a quarter said they're borrowing from friends or family to pay rent.

"A dip of 50 bucks or something in rent is not really compensating for what we need in income growth to make rent affordable," said Clifford.

The most comprehensive look at how much people are spending on rent relative to their income is data from the 2016 census, he said, since it captures both purpose-built rentals and also secondary stock like condos, basement suites and houses that are rented out.

The census found 44 per cent of renters in Vancouver and 47 per cent of renters in Toronto spent more than 30 per cent of their household income on rent and utilities, while 23 per cent of renters in both cities spent more than half.

The non-profit housing association is concerned that larger, institutional investors could capitalize on the pandemic and snap up rental properties, potentially at lower prices, said Clifford.

He said he's heard of buildings coming up for sale as so-called mom and pop landlords get older and their kids don't want to hold on to the job of renting them out, particularly amid the uncertainty of the pandemic.

Clifford said members of the B.C. Non-Profit Housing Association across the province have expressed interest in a fund that could help them borrow or subsidize the cost of acquiring rental buildings.

"You need to have some sort of public authority providing funds ... to kind of help compete with some of these bigger, private, institutional players in the real estate market," he said.

This report by The Canadian Press was first published Aug. 29, 2020.