A new study by Urbanation warns of massive Ontario rental supply shortfall, which will continue to diminish unless at least 6,250 additional new rental units are built each year for the next decade, in addition to the expected level of new development.
The warning comes at a time when vacancy rates in the province have already fallen to critical levels – just 2.1 per cent across the province and 1.3 per cent in the Greater Toronto Area (CMHC 2016 Rental Market Survey).
The report, commissioned by the Federation of Rental-housing Providers of Ontario (FRPO), illustrates the rental supply crisis by highlighting a number of cancelled purpose-built rental projects in the GTA. Before the introduction of Bill 124 earlier this year, proposed rental projects were at a 25 year high with 28,000 units in the planning pipeline. Since then, at least 1,000 planned rental units have already been cancelled or converted to condos, including: The King Portland Centre and Parkway Square Condos at Sheppard Ave. East in Toronto
To address this problem, FRPO has launched its ‘Rent On’ campaign, which encourages Ontarians to ask the provincial government to take measures to allow for more housing choices for renters by introducing amendments to Bill 124.
“Ontario’s scarce rental housing supply combined with escalating house and condo prices have created a housing crisis in our biggest cities,” said Jim Murphy, president of FRPO. “The only solution is for Ontario to build itself out of this situation. This begins with our provincial leaders working with industry to identify and implement policies that create more purpose-built rental units, not less.”
As the study reveals, demographic trends in Ontario are leading to ever increasing demand for rental housing. Millennials, new immigrants, and aging boomers are all increasingly likely to rent, particularly given the high cost of home ownership.
The report notes that “projections indicate a substantial imbalance between rental demand and supply in the Ontario marketplace over the next decade, which could reach potentially crisis levels in the absence of a meaningful increase in new purpose-built [rental] development.”
Increasingly, Ontarians are choosing to rent for the lifestyle benefits and flexibility – especially among millennials and seniors. Kate Burkholder is one of the many millennials currently searching for an apartment. Having just moved back to Toronto, she was devastated that finding a rental was so hard. “Moving back to Toronto from Vancouver, I was excited to find a better cost of living. Needless to say, I panicked when I realized there are next to no rental options. I am now looking at buying a condo outside of the city so I can afford to maintain my lifestyle.”
‘Rent On’ is a public engagement campaign designed to educate Ontarians about the economics of rental supply in the province, its impact on the real estate market, and how more units can help. The end goal is to put pressure on decision makers to ensure there are adequate rental housing options. Ontarians can learn more at www.rent-on.ca and can join the conversation on Facebook, Twitter and Instagram using the hashtag #rentON.
“This study truly underscores the urgency of Ontario’s current rental housing supply situation,” added Murphy. “If our government leaders fail to act now to address this crisis in a meaningful and sustainable way, the results will serve to further impact Ontario’s economy, such as through additional strain on our cities’ transit infrastructure as people are forced to commute further and further to find more affordable housing options.”
To read the full Urbanation study, visit http://rent-on.ca/sites/default/files/frpo-urbanation_report.pdf.