Thought renting in Toronto couldn’t get more expensive than it already is? Well, you’d be wrong.
Rental prices across the country are expected to increase by 6 per cent in the new year, according to Rentals.ca.
In Toronto, the increase is projected to be closer to 11 per cent. Mississauga has the second highest growth rate at 10 per cent.
Montreal and Edmonton are expected to have minimal growth at 1.3 and 0.3 per cent respectively.
Higher interest rates—economists expect two or three hikes in 2019—and increased immigration levels are partly to blame for the increase. The other cause is simply lack of supply.
“Most markets are not expected to see substantial increases in new home completions to offset that expected increase in demand,” Ben Myers, president of Bullpen Research & Consulting Inc. said in a statement. “The imbalance between supply and demand will continue, and rental rates will rise again next year.”
And of course, the fear of Toronto’s bubble-like real estate market doesn’t help either. Once you factor in the cost of ownership, you get even more interest in leasing versus buying.
“Many Torontonians are choosing to lease instead of buy, with existing tenants staying put to avoid paying the higher market-rate for an available unit,” Matt Danison, CEO of Rentals.ca said in a statement. “This phenomenon has reduced rental listings in this high-demand environment.”
Rentals.ca focuses their data on vacated units, which they claim gives them a better indication of market rental prices. As a result, Rentals.ca rates are 40 to 60 per cent higher than the CMHC. This is partly explained by rent control restrictions on older buildings.
In an effort to increase the amount of newly built rental units in the province, the Ontario government is exempting new builds from rent control restrictions. This is likely to play a significant role in increasing the cost of rent across the GTA.