Rental prices to continue climbing in large cities, experts say

Affordable housing to be an issue for renters in 2020

Climbing rents
Ammar Ibrahim, a longtime resident of 33 Davisville Ave., says his rent is lower than that faced by new tenants. Rita Maltceva/Toronto Observer

Housing affordability will likely stay one of the most significant issues in the GTA as annual rents will keep growing, housing experts say.

According to a new report by, the average rental rates increased by 6.8 per cent in 2019. Even though the vacancy rate reached 1.5 per cent, the demand for rental units remains high and surpasses the available accommodation.

“While the vacancy rate did increase slightly between 2018 and 2019, it’s still low from a historical perspective,” said Jordan Nanowski, senior analyst for Canada Mortgage and Housing Corporation.

“A low vacancy rate is indicative of a tight rental market, which creates market conditions where landlords can charge higher rents,” he said. “As a result, rents tend to grow faster in the GTA when the vacancy rate is low.”

Another cause of climbing rents is the fast growth of the main rental demographics, such as people between the ages of 25 and 44, immigrants, and non-permanent residents, Nanowski said. This has led the demand for rented housing to grow faster than the supply.

As the Canadian Rental Housing Index shows, 58 per cent of young families in Toronto spend about 30 per cent of their earning on rent and utilities. This rate is considered a healthy rent to income ratio. On the other hand, more than 35 per cent of young households spend more than 50 per cent.

“Over the last five years, GTA average rents saw growth similar to that of the minimum wage,” said Nanowski. “That being said, rental affordability remains a significant concern as many individuals in the GTA are spending more than 30% of their pre-tax income on rental accommodation.”

Landlords increase rent for new tenants to maintain the rental prices at the same level as the market value, said Ryan Mungal, a Toronto real estate agent.

“If landlords don’t increase it every time a tenant leaves, they won’t be keeping up with the market value.”

Jack, 30, who would not give his last name, moved to his building on Davisville Avenue in 2016. At that time, the rent for a one-bedroom apartment was $1,250 per month. Since then, his rental rate has increased from 1.5 to 2.5 per cent under the Consumer Price Index.

“That’s my rental rate, but now new tenants for the same unit pay $1750 and above. ,” he said. The management “crank it up for new tenants, because there is zero protection in terms of rental increases between new tenants.”

He said he feels lucky to have moved in three years ago when the housing was more affordable.

“I feel like I’m trapped… If my partner and I wanted to start a family, in [several years], there would be a huge increase in cost just to be able to get a second bedroom, let alone anybody who’s starting now.”

Climbing rents
Longtime tenants with slowly climbing rents are paying lower rates than new tenants who face rents that have been raised more dramatically.

Ammar Ibrahim, 35, has lived on Davisville Avenue since 2013. When he moved in, the price for his one-bedroom apartment was $1,500. Since Ibrahim has been renting the same unit for the last seven years, the price has raised only by $250.

“If I moved to a similar apartment next door, the price would be much different,” Ibrahim said. “Because of increasing rent, people don’t even move between apartments, even if they don’t like the place they live in now.”

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Posted: Feb 4 2020 11:31 am
Filed under: News