BUSINESS
01/16/2018 15:52 EST | Updated 01/16/2018 15:52 EST

Toronto Rental Rates Now Exceed Vancouver's, As Housing Shortage Persists

Got two grand to dish out for a one bedroom apartment?

Niloo138 via Getty Images
The CN Tower is seen behind condo towers on Toronto's waterfront. The city has surpassed Vancouver to be Canada's most expensive rental market.

In a sign that Canada's largest city continues to grapple with a housing shortage, rents in Toronto have now climbed above those of Vancouver, the long-running (and now former) champion of pricey apartments in Canada.

A one-bedroom apartment in Toronto now rents out for an average of $2,020, a 15.4-per-cent jump in the space of a year, and slightly more than the $2,000 average rent in Vancouver, according to data from rental site Padmapper.

The data includes rates for apartments as well as condos.

Padmapper

"The huge year over year rental growth is mostly due to the fact that the demand for rental units in (Toronto) is far outpacing the current supply," Padmapper spokesperson Crystal Chen told HuffPost Canada.

"Until there are new units built to meet this ever growing desire to live in Toronto, not much relief will come in the near future."

This may be little surprise to Torontonians, who have been grappling with a growing shortage of rental housing for years. Canada Mortgage and Housing Corp. (CMHC) reported in November that Toronto's apartment vacancy rate fell to 1.1 per cent last year, the lowest level in 16 years.

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"Rising costs of home ownership and lack of new rental supply kept vacancy rates at historic lows," CMHC market analyst Dana Senagama said at the time.

A similar dynamic can be seen in the condo market. Research firm Urbanation reported earlier this month that condo rental prices in Toronto jumped 9.1 per cent over the past year. The number of leased units fell by 11 per cent, but the number of new listings dropped by 16 per cent, meaning even tighter market conditions.

"Persistently strong rent growth throughout 2017 was simply the result of demand fundamentals for renting far outweighing supply," Urbanation senior vice president Shaun Hildebrand said in a statement.

"This has raised the confidence of developers to add more units to the pipeline, a trend that will need to continue in order to meet future housing needs for the GTA."

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Hildebrand suggested that rising rents are causing many tenants to stay put, rather than looking for new housing. This, in turn, is making the rental housing supply crunch even worse.

But even as Vancouver rents fall below Toronto's, the west coast city is still grappling with an unusually tight supply of rental housing.

The situation may be easing, though — slightly. CMHC reported last fall that Vancouver's vacancy rate has risen slightly to 0.9 per cent. While still a very low vacancy rate, it's still higher than the 0.7 per cent rate the city saw in 2016.

Montreal sees fastest-growing rental rates

Despite the ongoing supply shortages in Toronto and Vancouver, it's Montreal that has seen the fastest rental rate growth recently, with rental rates up 15.9 per cent for a one-bedroom apartment in the past year, to $1,310.

That may have something to do with a very strong Quebec economy over the past year. The province's unemployment rate has been on a two-year downward trend, and ended 2017 at 4.9 per cent — the lowest level the province recorded since comparable data began being collected in 1976.

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