A report from Urbanation Inc. shared that the Toronto condo rental market is getting hotter as the real estate market is cooling down as a result of the announcement of new provincial housing measures in April.
A New Housing Problem?
Real estate consulting firm Urbanation looked into the condominium rental market for the second quarter of 2017 and revealed that the new increased demand for condos may have been caused by the changes in housing that the province recently announced.
It should be noted that Toronto introduced its Fair Housing Plan in April of this year – a measure that included speculation tax for non-residents and widened rent control for buildings that were built after 1991. After the provincial announcement, Urbanation found out that condo leases grew 12%, hitting a record high. The rental values also rose up 11% and caused it to surpass the usual average of $2,000 for the first time in the area. Condo vacancies are also nearly non-existent.
In view of all these changes, it looks like those who already have an apartment are holding on to them longer as Urbanation observed that there are currently far less turnovers. Figures show that condo leases were an average of 17.9 months a year earlier and is now at 21.5 months this year at their latest report.
Urbanation senior vice-president Shaun Hildebrand says that the figures show that the province is grossly under-building rentals. He added that the rent controls measures that are in place are going to make the housing situation worse over time because less people would want to move out so there will be less turnover resulting in less supply. He also added that when and if this continues, the result will be a very unfavourable market for anyone who may have to move homes due to work or other circumstances.
There’s Hope for a Better Housing Situation Soon
Things are not all bad though. The silver lining to all that is going on now is that there is now an increase of proposals to build rental properties although not at a fast enough rate.
Last quarter’s under construction rental units numbered at 5,821, a number that is less than the 5,992 under the same period last year but at least higher than the figures for the first quarter of 2017.
Mr. Hildebrand brings up that a positive thing to note is that the long-term trend point to a growing number of proposals. He further shared that the demand for more rental units can at least encourage developers to invest into building more purpose-built rentals.
Hildebrand added that there could be another thing to look forward to later in the year when some buyers may choose to go back to home ownership market and new condo developments rise up.