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Condo rentals surge in Toronto, but renters expected to pay more

These are stories Report on Business is following Friday, July 18, 2014.

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Toronto condo rentals surge
The market for condominium rentals in Toronto is surging, but rental costs are expected to rise.

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That's because the pace of new listings is lagging that of transactions, according to the Toronto Real Estate Board.

And it suggests something of a shift given that rental costs dipped in the second quarter of the year in a city whose condo market is deemed frothy by some observers.

Rental transactions, largely those of investors renting out their units, surged by 25.7 per cent in the second quarter of this year compared to the same three-month period of 2013.

The number of units put up for rent also rose sharply, though at a slower pace than the transactions, at 22.2 per cent.

"Last quarter we saw stronger growth in the number of units rented relative to the number of units listed," Jason Mercer, the group's senior manager of market analysis, said today.

"This suggests that competition between renters increased," Mr. Mercer said in the TREB report.

"If this trend continues, we will likely experience renewed growth in average rents in the second half of 2014."

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Between April and June, the realtors group said, the average rental cost of a one-bedroom unit eased 1.7 per cent to $1,583, while that for a two-bedroom apartment dipped at a pace just slightly below that to $2,142.

Condo sales in Toronto, in turn, climbed 10.4 per cent in the second quarter, while new listings lagged at 4.4 per cent.

The average sale price rose 5.5 per cent.

The city's condo market has been a source of concern, given the pace of construction, though Mr. Mercer said demand should support that.

"Even as inventory levels increase due to record occupancies in 2013, we should see enough demand to sustain price growth above the rate of inflation in the second half of this year," he said.

Inflation rises
Food and other price increases have pushed inflation in Canada to its fastest pace in 28 months.

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The annual pace of inflation ticked up to 2.4 per cent in June from 2.3 per cent in May, Statistics Canada said today, though, on a monthly basis, consumer price increases slowed to 0.1 per cent.

So-called core prices, which strip out volatile items and help guide the Bank of Canada, also rose on an annual basis, to 1.8 per cent from 1.7 per cent.

Food prices continued to pick up last month, according to the statistics agency, rising 2.9 per cent from a year earlier, compared to the May pace of 2.3 per cent. That was fed by a 3.2-per-cent jump in food purchased from stores, as meat spiked by 9.4 per cent and fresh vegetables by 9.5 per cent.

The Bank of Canada has suggested that the stronger pace of inflation in Canada of late is temporary.

"Over all, the small uptick in core inflation due to higher food inflation and exchange rate pass-through effects won't concern the Bank of Canada because these temporary factors don't reflect any fundamental improvement in domestic economic conditions," said David Madani of Capital Economics in Toronto.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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