Toronto Mayor John Tory says the city’s housing affordability has improved, but there’s still more that needs to be done.

“Things are better than they were,” Tory told BNN in an interview Thursday. “But nowhere as good as they need to be.”

He said while there’s a whole host of issues facing the city’s housing market that need to be addressed, the big one is the shortage of affordable rental units.

“You need people who work in lower-income jobs … to be able to live in the city to hold those jobs. And right now they are struggling to find housing,” he said. “And so the real shortage is of affordable rental accommodation.”

Average rent for a one-bedroom condo in Toronto soared 10.9 per cent year-over-year to $1,970 in the fourth quarter of 2017, according to the Toronto Real Estate Board, while condo listings were down 3.4 per cent in the quarter compared to a year earlier.

One way to improve rental affordability, according to Tory, is for governments and the private sector to come up with creative solutions that involve freeing up more land and creating mixed income communities.  

“We need affordable rental housing and I think that starts with creative solutions that maybe start with government saying fine, we’ll put up land – because government probably owns more land than it should or it needs to,” Tory said. “And then we need the private sector to come to the table and say, ‘We will be creative about how we can build mixed income communities but that contain a significant affordable component.’”

But Tory acknowledged rent control may be hindering the private sector’s willingness to invest in rental units. He said there are ways governments can make building those units more attractive, however, such as providing the land and streamlining regulations to get building permits approved sooner.

“You sort have to play with the cards you have in your hand,” he said. “And that’s what we’re doing.”

While some still worry about the impact of foreign ownership on the city’s housing prices, Tory puts most of the blame on supply and demand.

The Ontario government aimed to reduce the heat in Toronto’s housing market last year by introducing a 15-per-cent levy on foreign speculators in April. But Tory says that’s less of a concern now.

The latest housing data from TREB shows the average selling price in December inched up 0.7 per cent year-over-year to $735,021, with condos leading the way. Even so, home prices in the city are well below their April peak of $920,791.

“There has been such a huge number of people continuing to come to the city that I think a lot of the house price increases have been driven by the law of supply and demand – which you can’t really control,” Tory said.

“Speculation, including by some foreign owners, was a concern,” he added. “I think some of that’s been dampened down by various other things that have happened, from governments and otherwise. Again, you can help to manage these things a little bit, but you can’t control them. So the key is I think, to increase the supply.”