Exceptional job growth in the Greater Toronto Area, along with consistently high immigration, has spurred strong rental demand through the first half of 2019.
According to a report from Marcus & Millichap, the region is brimming with tech sector talent and it played a crucial role in the 81,600 jobs created in the GTA through the first two quarters of the year.
“Employment grew at a rate of 3.4% year-over-year in June, a substantial rise from the 2.9% pace posted one year earlier,” read the Marcus & Millichap Multifamily Market Report. “A less restrictive immigration policy in contrast to the U.S., coupled with a mature tech ecosystem backed by government incentives and world-class universities, has Microsoft, Amazon, Pinterest, and many other global firms searching for talent in the metro. A healthy economy and labour market have been a boon for household formation, a key driver of apartment demand, contributing to a strong rental market over the last few years.”
The ripple effects of B-20 continue being felt in the GTA, where the benchmark price of a single-family home in June was more than $875,000, serving as another major driver of rental demand. The report makes note of the fact that, at the end of 2018, the average rental unit in Metro Toronto was $1,370, a 4.7% rise over the previous year.
However, that was still around $2,000 less in monthly payments than the single-family benchmark price—a fact most salient for first-time homebuyers—which has come with its own set of problems.
“A challenging housing market, particularly for first-time buyers, has led to rental demand far exceeding supply growth, holding the vacancy rate at a tight 1.1% last year,” said the report.
The report also cites investor interest in the GTA market, resulting in a 9% increase to the average purchase price as it surpassed $277,000 per unit.
“Assets in the heart of Toronto changed hands at an average price just below $300,000 per unit. Greater affordability was found in Brampton, Scarborough and Oakville, with properties trading on a per unit basis in the low-$200,000 band.”
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
