Posted April 13, 2017
In the middle of a housing affordability crisis new construction on purpose-built rentals has stalled, according to a new report from condo market research firm Urbanation.
Shaun Hildebrand, Urbanation’s senior vice president, said there’s been “a dramatic pull back in the construction starts of purpose built rentals beginning in 2016.”
“If rental demand remains as strong as it has been I think we’re going to fall back into a situation where supply’s going to be in a severe shortage in that area,” said Hildebrand.
Hildebrand said delays in “getting the green light from the city or the Ontario Municipal Board” to go ahead with projects are behind it.
But more recently speculation and uncertainty about rent control may be causing “stalling” on the part of developers.
The provincial government has promised to expand rent control but it’s not clear whether an exemption to rent control caps for all buildings built after 1991 will be changed.
“I don’t necessarily think that rent control is going to cause a collapse in new rental development but it’s going to cause developers to think twice,” said Hildebrand.
Average condo rents in the GTA are also up 8 per cent since this time last year, not as much as the record breaking levels seen in late 2016.
Hildebrand said he expects only “moderate” rent increases for the next couple of years as the market stabilizes.
Kemba Robinson, chair person for the York West chapter of Acorn, a community group that advocates for low and middle income people, said rents are continuing to climb and taking up more and more of working people’s income.
Robinson said rent increases are a problem even for buildings built before 1991, as landlords jack up rents to pay for capital repairs, known as ‘above the guidelines’ rent increases.
“Rent in Toronto is out of control,” she said.
“We’re not looking for stainless steel appliances, we’re just looking for a decent place to live.”
- In the GTA the average condo rent went up 8 per cent, from $1,891 a year ago to $1,993, but holds steady from last quarter where they were up nearly 12 per cent from the same time the previous year.
- The price per square foot actually dropped to $2.75, from $2.80 in the fourth quarter of 2016.
- In the city of Toronto average condo rent is now $2,094 for a 712 square foot unit compared to $2,040 for 702 square feet last quarter and $1,947 for 738 square feet the same time last year.
- The number of purpose-built units under construction fell to 5,290 units, down by 8 per cent or 455 units, from a year earlier.
The figures are based on condo rents for units listed on MLS.
Article by May Warren for Metro News