Toronto rents shot up at the fastest rate in a decade in 2019

Jan. 15, 2020
Thestar.com
Tess Kalinowski

A boost in the number of rentals helped lift the Toronto-area vacancy rate slightly last year, but 2019 also saw rents rise at the fastest rate in a decade as demand continued to outpace supply.

The cost of a two-bedroom apartment in the region rose 6.1 per cent in 2019 year over year, according to a report Wednesday from the Canadian Mortgage and Housing Corporation.

According to the CMHC’s Rental Market Report, rents on average for an apartment in the Toronto region increased 6.8 per cent last year to $1,452.

That compares with an annual increase in rents between between 2010 to 2016 of about 2 and 3 per cent.

An increase in the number of new rentals becoming occupied probably helped push up rent prices because newer apartments tend to rent for more than older places, according Jordan Nanowski, CMHC senior market analyst.

But he added that it’s too soon to know if the Ontario government’s end to rent controls on new units has played a role in rent escalation.

“The new (rental) stock added to the market isn’t market-changing,” he said. “It is not large enough to have a significant impact on rent growth.”

Fewer people are also moving, according to the CMHC’s report: the turnover on apartments fell to 9.5 per cent last year from 11.2 per cent in 2018, likely because the average rent on a vacant apartment tends to be about 25 per cent higher.

The GTA’s vacancy rate rose to 1.5 per cent last year, compared to 1.2 per cent in 2018. In the City of Toronto, vacancies increased to 1.5 per cent from 1.1 per cent. Halton Region also saw a rising vacancy rate of about 1.9 per cent from 1.5 per cent. About 3 per cent is considered a healthy vacancy rate.

That slight increase last year isn’t much help for house-hunting newcomers to the city and the fast growing, highly employable cohort aged 25 to 44, looking to rent.

Toronto Mayor John Tory said the high rent-low vacancy scenario is the byproduct of the city’s success in attracting about 70,000 new residents a year.

“We have to be building a lot of accommodation of all different kinds in order to accommodate that growth and success,” he said.

“There is lots of supply now coming on stream, both condos and increasingly rental, but the real key is how much affordable rental is coming on,” he said.