The market has seen its rent rates increase by around 20% annually
A combination of highly competitive rental market conditions and surging inbound immigration will likely keep upward pressure on Toronto-area rents for the foreseeable future, according to industry players.
John Pasalis, president of Realosophy Realty, said that the market has already seen its rent rates go up by 20% year-over-year, “so if we see some stability in [housing prices], we’re probably going to see a little more upward pressure on rents,” he said in an interview with BNN Bloomberg.
“If people can’t afford housing, they have to move somewhere, and that’s a reason rents have been rising,” Pasalis added. “It’s not a great time to be buying a rental property – right now, it’s still very expensive. The rental properties don’t make sense, at least not in the Toronto area, even with the higher rents at today’s higher interest rates.”
As of the second quarter, average Greater Toronto Area rents were at $2,269 for one-bedroom units and at $2,979 for two-bedroom units. During the same period, the market registered significant drops in the number of transactions (down by 11.4%) and listings (down by 30%).
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“I think it’s a very challenging market for an investor,” Pasalis elaborated. “I think most investors that I’m seeing are just waiting on the sidelines, waiting to see if prices dip a little further, and we probably will have downward pressure on prices.
“We definitely need more supply. The challenge is policymakers have no mechanism to make builders build in a high interest rate, slow environment where people are very reluctant to buy pre-construction housing.”
