If you thought you’d ride out London’s hot housing market in an apartment until things cool off, you might want to think again.
Hot housing market boosting rents
The booming home resale market is helping drive big increases in apartment rents and making vacancies more scarce - writes lfpress.com
AVERAGE ONE-BEDROOM RENTS
June 2018 (percentage increase from June 2017)
London $980 (15.3%)
Vancouver $2,090 (2.5%)
Toronto $2,070 (15.6%)
Montreal $1,250 (4.2%)
Kingston $1,180 (12.4%)
Ottawa $1,180 (8.3%)
Calgary $1,140 (8.6.%)
Hamilton $1,090 (14,7%)
Kitchener $1,080 (10.2%)
Windsor $720 (10.8%)
Apartment-hunting website PadMapper, which surveys prices in major Canadian cities monthly, shows average rents for a one-bedroom apartment in London have soared 15 per cent during the last year to $980 a month, including a 3.2-per-cent jump in June alone.
Canada Mortgage and Housing Corp. (CMHC) had already pegged the apartment vacancy rate for the metro London area at 1.8 per cent, its lowest rate in 18 years, in itsmost recent annual survey, conducted in October.
London, while now clearly a landlord’s market, still is considered an affordablerental market, ranking 15th among major Canadian cities.
But the pressures of the hot housing market — and the local fallout of the far pricier Greater Toronto Area (GTA,) from which home sellers are cashing out and snapping up new digs in London at relative bargains, often squeezing out would-be local buyers — are having an impact.
Average monthly rent for a one-bedroom apartment in Toronto is $2,070.
The red-hot market in Toronto last year is partly to blame for London’s rising rents and tight vacancies, saidCMHC analyst Anthony Passarelli.
London-St. Thomas realtors racked up a record 11,293 sales last year and that should have freed up a lot of apartments as renters bought up homes.
“But affordability in other areas is eroding and people are moving to London. Those buyers aren’t currently renting in London. They are coming from outside the region,” said Passarelli.
Those deep-pocketed GTA buyers helped drive up the average sale price of a home in London-St. Thomas by 18 per cent last year, making the market less affordable.
At the same time, the federal government tightened up mortgage rules. That combination forced some London renters to give up on house-hunting.
There was no lack of new housing in the London area last year, with 2,127 multi-unit housing starts, many of them apartment or condo units that could be converted to rentals.
But the construction pace for multi-family units has slowed this year, and Passarelli said some of the new projects begun in 2017 still are not finished including a 299-unit, 21-storey apartment building in Old East Village.
The supply of affordable apartments in London, meanwhile, is rapidly evaporating, saidJacqueline Thompson, executive director of LifeSpin, an advocacy agency for lower-income Londoners.
She estimates there are only about 340 apartments in the city of any kind renting for less than $1,000 a month and some would be bachelor units.
“If you have a larger family, you are out of luck. There just isn’t anything,” she said.
Thompson said the city’s affordable housing reserve fund is only a “drop in the bucket” toward meeting the demand, with only about 47 new units due to be completed in the city next year.
London’s Housing Development Corp. (HDC) works with private developers to create new projects that are a mix of affordable and market rent units.
Several planned projects could result in as many as 156 new affordable units becoming available next year.
But Steve Giustizia, who heads the HDC, said affordability is becoming a big challenge and CMHC figures show a larger group of Londoners, especially young people new to the job market, are spending more than 30 per cent of their income on housing.
“People are feeling it. They are seeing that all around, whether it’s sons or daughters or friends,” said Giustizia
One major change that could affect the supply of affordable housing was introduced by Ontario’s departing Liberal government last year.
Inclusionary zoning is a new tool that gives Ontario cities the power to compel developers to include affordable housing units in large new residential projects, even luxury condos.
But London city council hasn’t yet done the groundwork needed to implement the new zoning, including a thorough inventory of housing needs.
Thompson said she’s skeptical Doug Ford’s new Progressive Conservative government will follow through on inclusionary zoning, noting the Mike Harris-led PC government elected more than 20 years ago cut back on funding affordable housing.
“1995, 21.6 per cent cut. I know it well,” she said.
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