The deficit of rental housing in the Greater Toronto Area is poised to double to 177,000 units over the next decade amid “record high immigration” and declining home ownership rates, a new report warns.
The report, released on Thursday by the Building Industry and Land Development Association (BILD) and the Federation of Rental-housing Providers of Ontario, suggests that the number of renter households in the GTA will rise by 58 per cent over the next decade to 312,000.
But it says that “under the current development trajectory” Ontario is only track to add about 135,000 rental units during that time. That would be an improvement on the previous 10-year period by about 24,000 units but won’t be enough to offset the rise in demand for rental housing,
“There was a surge in purpose-built rental starts in the region in 2018, but that appears to be stalling out,” BILD President and CEO Dave Wilkes said in a press release accompanying the report. “Purpose-built rentals represent a vital segment of the GTA and Ontario’s housing stock. They are dedicated rental housing and provide security of tenure. Unfortunately, we are just not seeing purpose-built rentals being built at the scale that is required. It comes down to the economics of building and managing these type of buildings.”
The report says that almost 90 per cent of the purpose-built rental stock in the GTA was built more than 40 years ago and in some cases could be approaching the end of its lifespan.
At the same time the demand for rentals in the GTA has soared.
The report says that over the last decade the number of renter households in the GTA grew more than three times faster than the number of owner households (26 per cent versus eight per cent)
During that same time period only 14,853 new units of purpose-built rental housing came to the market.
The report acknowledged that that the condominium boom in recent years did help supplement the rental housing supply in the GTA but it warns that “more challenging investment economics should lead to a reduced share of condo investors” going forward.
“In order to tackle our housing crisis, we need to build much more purpose-built rental housing, faster,” Tony Irwin, the President and CEO of FRPO, said in the press release. “The majority of Ontario’s purpose-built rental housing stock was built before 1980, so new units are essential to provide more choice and take the pressure off aging units. We are calling on all levels of government to make new purpose-built rental housing a priority and to create a policy regime that recognizes the unique nature of this type development.”
The report states that the number of rental construction starts will need to “more than double their current pace immediately” in order to ensure the deficit in the GTA doesn’t continue to grow.
However, it points out that doing so won’t “correct for years of underbuilding and accumulating rental supply deficits.
“Rather it will just prevent the situation from getting worse,” the report says.
