Apartment vacancy rates in the Greater Toronto Area are tightening as economic uncertainty means potential first-time buyers are staying with rental accommodation, according to a new report.

Average apartment vacancy rates decreased sharply to 2.1 per cent compared with 3.1 per cent a year ago, according to a report released Thursday by the Canada Mortgage and Housing Corp.

“At the same time, the inflow of new renters increased due to rising immigration and more job opportunities,” CMHC said.

CMHC says the current vacancy rates are producing “some of the tightest conditions over the past 10 years.”

Strong demand for renting has meant a 30 per cent decrease in the number of vacant units.
“The most influential underlying force was the marked slowdown in demand for buying homes.”

Higher home prices and tighter mortgage restrictions have priced some homebuyers out of the market.

The recession was also tough on the youth labour market, which is the most likely to rent, according to the CMHC.

“The outflow of renter households into home ownership has been restrained by the increased presence of underemployment,” said the CMHC.

The average rent for a two-bedroom apartment increased by 1.8 per cent over last year to $1,123.

Nationally, vacancy rates decreased at a more moderate level, to 2.6 per cent from 2.8 per cent.

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