A square deal for city renters

19 May 2011 04:01
 

http://www.metronews.ca/toronto/local/article/865043–a-square-deal-for-city-renters

A crane on the skyline is a potent sign of Toronto’s seemingly never-ending condo boom. But as prices outpace rents, investors could decide to pull out.

A glut of condominiums in the Toronto market is keeping rents down even as the cost of buying a unit has been rising.

It’s a great recipe for renters, but not so tasty for investors, who buy an estimated 45 to 60 per cent of all new condos in Toronto, according to a study released yesterday by Urbanation Inc.

“Rents are not keeping up with price inflation in any of the major municipalities in the Toronto area,” said Ben Myers, executive vice-president of the market research firm.

“As the price of new condominium projects continues to escalate, the expectation would be that rents in newly registered projects would be higher than projects registered in years prior.”

However, rents have barely budged from the 2007 level of $2.26 per square foot. The average condo leased in the first quarter of 2011 was 800 square feet, with an average rent of $1,686.

“Positive monthly returns for investors are being eroded,” Myers said.

That could spell trouble for the still robust GTA condominium market if investors — buyers who don’t intend to occupy their units — decide to pull out because they can’t get the returns in rent they need to justify their investment.