Slight increase in new rental units falls far short of rise in demand
Rental vacancy rates hit an unwelcome milestone in Toronto this year, according to annual data published by the Canada Mortgage and Housing Corporation (CMHC) November 28.
In the Toronto Census Metropolitan Area (CMA), vacancies in purpose-built apartments now stand at 1%, down from 1.3% a year ago, according to the federal housing agency’s yearly survey. And among the smaller number of condos that are rented out, vacancies have fallen from 1% a year ago to 0.7% this fall.
Across Ontario as a whole, purpose-built rental vacancies fell from 2.1% in fall 2016 to 1.6% this year, as increased demand far outstripped the 8,551-unit increase in new purpose-built apartments across the province.
The CMHC said that a strengthening Ontario economy, leading to increased new jobs and demand for rental housing among young employees was a key factor, along with higher mortgage costs leading renters to stay out of homeownership longer.
The CMAs of Kingston, Thunder Bay and Hamilton saw even sharper declines in vacancy rates than Toronto, with Kingston’s rate dropping dramatically from 2.7% a year ago to 0.7% in 2017.
Unsurprisingly, average rents continued to increase faster than inflation – although not as fast as in Vancouver, even though vacancies have eased slightly in that CMA. The average rent for a one-bedroom apartment in Toronto CMA this fall is $1,194, up 4.4% from last year’s $1,132. In a rental condo, that figure rises to $1,803.
Across the whole of Ontario, the average rent for a one-bedroom purpose-built apartment is up 3.9% year over year to $1,144.