“Concerns have been raised about the growing number of investors fuelling the growth in condo sales in recent years,” said Robert Hogue, a senior economist with RBC in a report Thursday. He says condominium units fill a need in the rental market because few apartment buildings have been initiated in the last two decades.
RBC estimates about 20 per cent of all condominiums are rented. In recent years, that figure could be higher, since market research firm Urbanation Inc. estimates that 45 to 60 per cent of all new units are being purchased by investors. Some of those investors will rent their property out, while others will sell the unit on closing.
Vacancy rates in the Toronto market dropped sharply to 1.6 per cent in April compared with 2.7 per cent a year earlier, according to the Canada Mortgage and Housing Corporation.
Condominium sales have been on a tear in the Toronto area, representing the largest market in North America. In the GTA alone, there are 37,700 units currently under construction. Thanks largely to condos, sales of new homes were also up by 53 per cent in June, compared with the same month a year earlier of 3,050, according to figures released by RealNet Canada Inc. Tuesday. Nearly two thirds of all sales in June were condos, up from the historical norm of about 40 per cent.
However, Hogue said while the number of completed units awaiting occupancy is at the highest level since the 1990s, the percentage of unoccupied units are still below long-term averages.