Investment-use condos are the most significant obstacles to housing affordability in Toronto, according to observers.
Latest Statistics Canada numbers indicated that fully 39.7% of the market’s condos are not owner-occupied, meaning they are either vacant, rented out, or used as second properties by their owners.
Andy Yan, the director of the City Program at Vancouver’s Simon Fraser University, stated that the data only proved that Canadian housing is no longer for Canadians, but rather for those who can command the highest prices.
Wealthy foreigners, especially those from mainland China, have been pinpointed by multiple analyses as major factors promoting out-of-control home price growth.
“It’s not about supply or demand anymore,” Yan said, as quoted by The Guardian. “It’s ‘who are we building for?’”
Aggravating these conditions is that the development of purpose-built rental units was never a high priority for any provincial government over the past four decades or so.
Moreover, any newly built units that do enter the market tend to be expensive condos that get rapidly snapped up by wealthy investors, Realosophy Realty president John Pasalis stated.
“Five years down the road, do we really need 50,000 micro-condominiums that are renting for C$2,000 a month?” Pasalis asked “I think this is the risk when your entire new housing supply is driven by what investors want, rather than what end users want.”
With a perennial shortage of mid- and low-cost options, the average rent rate of Toronto’s condos shot up by 30% between 2006 and 2018.
And the phenomenon is not isolated to the city: Vancouver is also suffering under near-identical market conditions, with nearly half of its condos being held by investors. Only 12% of the population is estimated to be able to afford the city’s homes, even at the benchmark price.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate