The Toronto housing market’s increase in purpose-built units was the “strongest in decades,” but supply was still overshadowed by demand in 2022, according to a new report.
The Canada Mortgage and Housing Corporation (CMHC) released its 2022 rental market report on Thursday.
According to the report, Toronto, Vancouver and Montreal, three of Canada’s largest rental markets, showed a sharp decline in rental supply which could only get worse due to the government’s recent interest rate hike announced on Wednesday.
“This (interest rate hike) will put added strain on our already dismal housing supply, as the government plans to allow 1.5 million new immigrants over the next three years, university students are back to in-school learning, and high real estate prices and interest rates are preventing many renters from buying their first home” Alan Wong, a realtor with Berkshire Hathaway in Toronto, told Now Toronto.
Eased border restrictions and higher immigration, as Wong mentioned, are reasons why demand has remained higher than supply, and the highest since 2013.
Ontario is noted to have the highest level of international immigration, while the Greater Toronto Area accounted for 80 per cent of net international immigration to Ontario, according to the report.
The primary rental vacancy rate for apartments in Toronto fell to 1.7 per cent from 4.4 per cent in 2022. Is it common for new migrants to rent when they first move to Canada, the CMHC said in its report.
Higher rent growth was widespread over the country, but the sharpest increases were seen in Vancouver and Toronto. The average rent for a two- bedroom purpose-built unit in Toronto was $1,799, and $2,002 in Vancouver last year.
The share of rental units that were affordable for the lowest-income renter, those who spend 30 per cent or less of their gross income on rent,was too low to report in most markets, the CMHC said.
Nationally,despite a market increase in rental supply in some of Canada’s largest cities, demand pushed the national vacancy rate for purpose- built rental apartments down from 3.1per cent to 1.9 per cent in 2022, the lowest since 2001.
“Lower vacancy rates and rising rents were a common theme across Canada in 2022. This caused affordability challenges for renters, especially those in the lower income ranges, with very few units in the market available in their price range,” Bob Dugan, CMHC’s chief economist, said in a press release.
A report issued by CMHC in June 2022, projected Canada needed to build 3.5 million additional housing units by 2030 to make housing affordable for everyone,that’s double the number of homes that are currently being produced now.
The report shows rental supply grew by 55,000, or 2.6 per cent in 2022, but demand overshadowed it with 79,000 additional units occupied in the country.