Top 5 contributing factors to Toronto’s increasing rent rates

Queensway Real Estate Brokerage

November 8th, 2023

Top 5 contributing factors to Toronto’s increasing rent rates

Toronto is known as a widely diverse and vibrant city. It attracts tourists and immigrants from all over the world and is known as the Economic Center of Canada. Toronto carries various opportunities with the strong job market and well thought out structure. It is however, common knowledge that Toronto’s  housing market is often intense and rapidly changing. Some factors that contribute are the following: 

 

1. Limited Housing Supply: Toronto has a high demand for rental units and the actual supply struggles to keep pace. Being in the top 5 most populous cities in North America and the most populous city in Canada, it carries over 2.7 million citizens making the housing market competitive as well as fast growing. The current shortage of housing available is a large contributor to the growing rates in the Real Estate Market. More particularly desired housing, meaning housing in good neighborhoods, renovated housing, and/or condominiums can get pricier as a method of reflecting value and their benefits. 

 

2. Construction Costs Rising: The cost of constructing new buildings, rental units and other properties has been steadily but surely rising due to material costs, government regulations, labor expenses and other factors. This takes a toll on the prices of renovated rental units. A grand reason for this is inflation. As of September 2023 annual inflation rate in Canada has reached 4% overall.

 

3. Economic Factors: As mentioned in the introduction, The GTA is an ideal home for a rather large number of people, it's a desirable area because it carries benefits such as a balance of urban and suburban housing, great quality of life, diversity, entertainment and it enforces the importance of a strong and healthy job market with fair wages, regulations and plenty of opportunities. Toronto is said to be one of the best places to manage business with the GDP (Gross Domestic Product) growth being ahead of the rest of Canada by 0.6%. This leads to an increasing demand for housing and makes for a growing market. 

 

4. Urbanization and Preferences: Toronto has been described as a mini Manhattan and although we’re definitely not at Manhattan’s  level, the most popular areas are very urban which can be a selling point due to its convenience. Having benefits such as a gym, pool, direct public transit access to your building, the proximity of establishments and a couple of others create a comfortable preferable environment and fit in many people’s boxes. 

 

5. Foreign Investments: As Toronto gains more and more global recognition, investors realize there is a real goldmine in buying properties in Toronto due to its economic richness. Real Estate Investment can be a very lucrative business if  handled properly but it does lead to a more competitive market and is nonetheless a contributing factor to why our housing market is the way it is. 

Although sometimes extreme, Toronto’s Real Estate Market can be such a lucrative opportunity and Toronto itself is a desirable and beautiful city with so many advantages and opportunities. Not only ranked as one of the best cities to live in nationally but also in the 12th safest country in the world. Carrying the valuable qualities of being a socially progressive, multicultural place and so much more, the living qualities can be quite phenomenal, giving substance to the growing rent rates. 

Info Credits: 

 

https://www.cbc.ca/news/business/inflation-cpi-canada-august-1.6971136

 

https://www.thestar.com/business/out-of-control-rental-market-one-room-in-a-shared-toronto-apartment-hits-a-high/article_e981ee12-1ddf-53a4-9e14-a0759be7f91f.html

 

https://wisevoter.com/country-rankings/safest-countries-in-the-world/

 

https://www.google.com/search?q=quality+of+life+toronto&rlz=1C1RXMK_enCA1035CA1048&oq=quality+of+life+toronto&aqs=chrome..69i57j0i512j0i22i30l8.12489j0j7&sourceid=chrome&ie=UTF-8