A new report on that much debated sector argues that despite the massive influx of supply in Toronto, rental rates are expected to remain relatively strong. This is welcome news for condo investors worried about growing competition and a possible swing away from the current landlord's market.
In a new report, CIBC says despite the fact there are some 64,000 condo units being built in Toronto. With up to 50 per cent of them are likely to be rented out. There is, in fact, minimal impact on rental rates expected, largely due to continued high immigration. CMHC is calling for continued moderate gains in rental rates.
“Such excess supply will raise vacancy rates in the condo space by an estimated 0.3 to 0.4 per cent in both cities in the coming years," writes CIBC deputy chief economist Benjamin Tal. "That is not large enough a damage to derail the market or lead to a substantial softening in rental inflation.”
Investors in Canada's largest condo markets have been in the in a strong position for the last three years as urban centres continue to reclaim their spot as the preferred place to call home. While escalating condo prices have challenged cash flow, lower mortgage costs have helped to protect profitability. The 5 year fixed rates continue to hover at historical lows of around 3%.