The rental market remains tight across the GTA — and especially in the highly-coveted downtown core — despite a surge of new condos over the last five years that now account for 16 per cent of all the rental units in the region, according to the Canada Mortgage and Housing Corporation.
While the vacancy rate for rental apartments bumped up slightly in October over a year earlier, it still remains at one of its lowest levels in a decade, 1.7 per cent, compared to an even lower vacancy rate of 1.2 per cent for rental condos, the federal housing authority said Thursday.
That slip year-over-year in condo vacancy rates occurred despite the fact there was a six per cent increase in the number of condo units up for rent in the GTA in October over a year earlier.
Condo rents continue to run about 40 per cent higher than apartment rents, especially older apartments, notes the report.
A one-bedroom unit in the GTA now rents for an average $1, 003 a month , compared to $1,430 for a rental condo while two-bedroom apartments average $1,170 compared to $1,586 for a rental condo.
Rents are higher in the City of Toronto: $1,010 for a one-bedroom apartment compared to $1,456 for a condo. Two bedrooms average $1,194 and $1,602 respectively, says the report.
An estimated 33 per cent of all new condos coming on the market across the GTA are now being rented out rather than lived in by owners, but competition remains especially fierce in the coveted downtown core and, increasingly, North York and Peel Region, according to CMHC.
Yet all those new investor-owned glass-and-granite rental condos did little to ease demand and drive up vacancy rates in older, purpose-built apartments, which stood at just 1.4 per cent in October of 2011, according to the annual rental market review.
“While vacancy rates increased slightly this year, the overall average rate remained relatively low as job opportunities improved, first-time (home) buying slowed and supply growth remained muted.
“The increase in vacancy rates can partly be attributed to fewer young adults and immigrants entering the market, as well as more people leaving the GTA or choosing to rent in the condo market,” said Shaun Hildebrand, CMHC’s senior market analyst for the GTA.
Average rents increased by 2.8 per cent across the GTA, but by 4 per cent in the City of Toronto where the vacancy rate has slipped below one per cent.
By Susan Pigg