A new report on the condo market says despite the massive influx of supply in some cities, rental rates are expected to remain relatively strong, which is welcome news for condo investors, reports the Financial Post.

The CIBC-released report says despite the fact there are some 64,000 condo units being built in Toronto — up to 50 per cent of them are likely to be rented out — it procably will not have a significant impact on rental rates. The same can be said about Vancouver.

According to the report, which was written by CIBC deputy chief economist Benjamin Tal, “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. That is not large enough a damage to derail the market or lead to a substantial softening in rental inflation.”

Tal indicates that real challenge for condo investors going forward will be higher financing or opportunity costs as the mortgage rates trend upward. Presently, the rate for five-year fixed rate mortgages is around 3 per cent, as bond yields fell recently.

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