Why is rent so high in Toronto?
There is no denying that rent in Toronto is absurdly high! With an average one bedroom condo renting for approximately $2242 now, it’s no surprise that Toronto is ranked #1 as the most expensive city to live in Canada.
Unlike the rest of Canada, where the average rent per province is $1286, Ontario’s $2189 rent is almost two times higher than everywhere else. When you consider this stark contrast, one has to wonder why is rent so high in Toronto anyways.
To get to the bottom of this, let’s example a few factors that may be driving prices so high.
Popular Growth
According to World Population Review, Toronto is the 4th most populous city in North America. With population increasing by 1.14% from 2015 to 2019 (an increase of 272,112 people), there is no doubt that this rapid population growth is the result in increased housing demand.
Despite Toronto’s popular growth, there is not enough vacant houses or rental units for people to live in, which is one reason for the tremendous rental inflation over the last several years.
Removal of Rent Control
Since the Ford government came into power last year, many things have changed, including the removal of rent control in Toronto. Although the removal of rent control will only affect new units vacated after this new policy came out, it’s definitely one of the biggest reasons why rent is so high in Toronto.
Rent control, for those unfamiliar, is to ensure that there is a certain amount of affordable housing for lower and middle-income citizens. By removing rent control, landlords are able to increase their rent to whatever amount they want once a tenant moves out. As a result, this causes the trickle effect of low vacancy rate too.
With fewer rental vacancies, it is no surprise that there is a fierce competition for available condos and apartments.
Foreign Investments
According to condo.ca, about 10% of Toronto’s condos built since 2010 are owned by non-residents. It’s official. Toronto has beat even Vancouver, where 6%of the newly built condos are owned by foreign investors.
For many foreign investors, their intentions are to buy properties and then flip them as soon as they can. For other investors, they buy the condos as rental investments. Regardless of the purpose of their investments, it goes without saying that rental prices are increasing rapidly due to it.
Since foreign investors own 10% of Toronto’s condo market, they have a big say over how much they want to charge residents renting with them.
Easy Access to Goods and Services
As the fourth largest city in North America and one of the most multicultural cities in the world, Toronto is definitely a placed many people would like to live in. In addition to those highlights, Toronto’s accessible transportation, and easy access to goods and services, is another factor why people are driven to be in Toronto.
Of course, not all areas of Toronto are as spectacular as one would think. The closer you are to the downtown core, the easier it will be for you to access the restaurants, entertainment, and other services like schools, work offices, shopping centres, and more.
That is why rental prices differ in all parts of Toronto, but nonetheless still remain quite high because all parts of the city are connected.
Booming Tech scene
It’s natural to want to live closer to your work. As one of the most economically active cities in Canada, there are plenty of high paying jobs in Toronto, especially in the tech scene.
According to the Medium, Toronto has created 28,9000 tech jobs in 2017! The amount of tech jobs added in 2017 was more than the number of available jobs in San Francisco Bay area, Seattle, and Washington combined!
Not only are a lot of locals obtaining higher paid jobs these days, a lot of people are migrating to Toronto to work for these tech jobs too. With all these factors added together, landlords are swooping in to charge as much as they would get away with, regardless of lower income earner situations.
Due to the ripple effects of a booming economy, the growth of the tech scene, and the increased amount of people wanting to live closer to work, there is no doubt that the housing market will continue to raise and rental prices will also increase too.
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