Living accommodations in the GTA have increased in availability over the last year, according to a new report, but rent hikes have made these spots difficult to access.
And rents were high, in fact, the average rent growth in the GTA significantly exceeded the provincial guideline.
The Canada Mortgage and Housing Corporation (CMHC) conducts the Rental Market Survey (RMS) every year in October, in all urban areas with populations of 10,000 and more.
CMHC says it also surveys the secondary rental condominium apartment market in September in 17 major centres
“The national vacancy rate for purpose-built rental apartments declined for a third consecutive year in 2019, as strong rental demand continued to outpace growth in supply,” said Bob Dugan, CMHC’s chief economist.
“Low vacancy rates in major centres underscore the need for increased rental supply to ensure access to affordable housing.”
This year, the survey shows that vacancy rates — the percentage of available units in a rental property — are up 1.5% from the previous year’s 1.2% in the GTA.
In the City of Toronto specifically, the vacancy rate increased above 2%, with increased rental accommodation completions (read: the construction that’s seemingly everywhere and never-ending) to thank.
Although that increase sounds impactful, high homeownership costs combined with tight mortgage regulations mean that many living in the area have continued to seek rental accommodations, or remain in their current rented dwellings, rather than to buy.
In fact, the prices of of multiple-family dwellings (condo apartments, townhouses, etc.), which are reportedly more popular among first-time homebuyers, have showed stronger price growth than other types of housing.
The result? A low average apartment vacancy rate, from a historical standpoint.
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While rental accommodations have been needed, rental market conditions were “tight” throughout last year, which saw landlords charging new tenants higher rents.
The number of newly completed purpose-built rentals (which are meant for longer-term tenants, and typically charge higher rents) has also been going up in recent years. This, as well, contributes to the rising of average rents across the board.
According to the report, “average rent growth in the GTA significantly exceeded the provincial guideline of 1.8% for 2019.”
And that doesn’t include the secondary rental condominium apartment market.
“Tight rental market conditions in the primary rental market has extended to the secondary rental market, with the average condominium apartment vacancy rate edging up but remaining low from a historical standpoint at 0.8% in 2019,” said the CMHC.
“The lack of purpose-built rental supply in the primary rental market has meant that the condominium apartment market has acted as the de-facto rental accommodation supplier for many years in the GTA.”
CMHC continues to say that the stock of rental condominium apartments has grown by 6% in 2019 compared to the 3% from previous year.
The supply increases are due to a higher share of newly completed condos, as well as previously owner-occupied condominium units being leased.
But just as supply struggles to keep up with the increasing rental demand, property owners have been able to charge higher rents from tenants.
Despite the rising cost of renting in the city and surrounding area, the numbers show that many of those who are already situated are staying put.
The turnover rate decreased to 9.5% in 2019 from 11.2% in 2018, the study says, which is likely impacted by the fact that average asking rents for vacant units are about 25% higher compared to the ones that are occupied already.
But the demand for rental housing continues, and, it’s reportedly fronted by those who are young and those who are new to the city.
As of October, individuals aged 25 to 44 saw the strongest year-over-year growth in almost two decades, at 4.9%. The same demographic has seen significant year-over-year growth in full-time employment which, the report explains, gives them a greater ability to enter the rental space.
All the while, economic conditions in the GTA are continuously improving, particularly in tech, according to the study, with above-average weekly earnings and a low unemployment rate.
This draws immigrants and temporary workers into the area, further increasing rental demand. Additionally, the amount of international students has been growing faster in the GTA than in other major areas in Canada.
Over the course of 2019, supply struggled to keep up with the overall increasing rental demand, which meant property owners have been able to charge higher rents from tenants.
The matched-sample average rent for condominium apartments is reportedly almost 13% higher than the year prior.