According to a new rental report by Rentals.ca, Canada’s 2019 rental market may be witnessing an increase across the provinces – but especially within urban centres like Vancouver and Toronto. The report says average rents could increase by as much as 6 per cent year over year on a national basis. The Toronto market is predicted to jump as high as 11 per cent.
In part, the demand for rental units has come from the increasing challenges for Torontonians to purchase a home. As exorbitant house prices have pushed many would-be buyers into the rental market, that’s given the landlords the upper hand in pricing them. And rents have seen a rapid increase.
It’s a trend that has been waiting for developers to profit, which is why the Canada Mortgage and Housing Corporation (CMHC) has sited that more properties are being built exclusively for the purposes of renting. In fact, more construction on rental units is happening now than over the past 30 years.
It’s estimated that over 62,000 rental properties are currently under construction across the country – an unprecedented growth. That’s 10,000 more properties being built for rental purposes compared to last year. The largest jump in rental construction came between 2015-2016 when the Canadian number leapt from 28,257 to 43,353 developments.
Torontonians may laugh – but the Rentals.ca report stated that the average rent for listings for a 2-bedroom apartment across the country this year was $1,854. Meanwhile in Toronto, as BlogTO reported last year – the average 2-bedroom went for well over $2,500 in 2018.
The Toronto situation has been made more urgent in large cities due to the ongoing factor of “ghost hotels” or properties purchased with the exclusive purpose of functioning as an Airbnb listing. The HuffPost reported that just yesterday, short-term rental operators are actually appealing city regulations in an attempt to limit their number.
Monica Poremba, a lawyer with the Fairbnb advocacy group, said that the regulations come at an urgent time as the city faces a housing crunch that limits accessibility. She explained: “The City of Toronto is facing a housing crisis and the proliferation of short-term rentals, which has gone unchecked, has significantly exacerbated the crisis.” The plus side of buying to rent out a property on Airbnb is that landlords can ask for a premium rate and service tenants for a handful of days.
The Rental.ca report lists four major factors driving up rental prices: people staying put (due to the improbability of finding another apartment at the same price), homeowners reluctant to sell, rising interest rates, and an influx of new immigrants searching for new places to live. That said, the Financial Post noted that “immigrants to Canada may not necessarily be low-income. For instance, investor-class immigrants are usually wealthier than the native-born population, and could have a more substantial effect on housing.”
The Financial Post also noted that the influx of immigrants is vital to the Canadian economy as an ageing workforce retires. However, logically, most immigrants wish to live where there are already established networks and communities from their home countries, which is why the majority settle in Montreal, Toronto, and Vancouver. It’s also the big cities that offer the most job opportunities.
We’ll see where Toronto’s renters are next year once the rental developments are built and new regulations are set in place on the “ghost hotels.” Airbnb be damned!