Photo: James Bombales
The news about the Toronto’s tight rental market isn’t getting any better, according to the latest report from the Canada Mortgage and Housing Corporation (CMHC).
The federal housing agency reported today that the city’s rental vacancy rate, which currently sits at just 1.8 percent, remains at a historic low, as more and more people move into the region.
And, as the number of units available for rent dwindles, high demand and strong income growth are only driving rents up.
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“In Toronto, apartment rents grew above provincial guideline amounts despite turnover rates remaining below provincial averages,” reads the report. “Toronto continues to post vacancy rates that are near historic lows — providing greater pricing power for units that are vacated as evidenced by high asking rents.”
The report does note that the falling vacancy rate is encouraging a rise of condo development in the new construction market, as investors look to lease out their units to a market eager for more supply.
“Declining rental vacancy rates in recent years, encouraged more investment activity in the new construction market — resulting in more primary and secondary rental completions during the current year,” reads the report. “In addition, condominium apartment completions, some of which are owned by investors, rose from this time last year, exerting upward pressure on the condo rental universe.”
This echoes the sentiments of Bullpen Research & Consulting president Ben Myers, who wrote last week that a change in rent control legislation could boost the number of condos leased out by investors in the new year.
Earlier this month, the Ontario government reversed rent control legislation on all new housing units, effective immediately.
“The biggest impact as a result of this move will be keeping private investors interested in buying pre-construction condos to lease out,” writes Myers. “Condo investors have been responsible for over 75 percent of all new rental supply for the past 20 years in the GTA and without them, rental rates in the GTA would be much, much worse.”