TORONTO – October 14, 2016: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its third quarter 2016 rental results today.
The number of condo apartments rented through the MLS system during Q3-2016 in the Greater Toronto Area declined by 9% from a record high last year to 7,651 units. Activity was held back by a 13% drop in listings as the number of units in new projects registered during the quarter declined by 30% year-over-year. The ratio of leases-to-listings hit a new high of 89% while available listings at the end of the quarter fell to a more than five-year low of 930 units.
Market conditions became very tight in the third quarter with the average condo rental spending only 12 days on the market and the number of units renting for above asking price more than doubling from a year ago. This resulted in 9% annual growth in rents, the fastest rate of appreciation since Urbanation began tracking the market in 2011, with rent levels reaching new highs of $2.71 psf or $1,986 per month.
“The rental market has become severely undersupplied, which is likely to worsen following the latest round of mortgage insurance rule changes” said Shaun Hildebrand, Urbanation’s Senior Vice President. “Notably higher qualification standards for first-time buyers and reduced credit availability for investors should put even more pressure on the market, even as more rental units are being built” added Hildebrand.
Condo Rental Market
Average monthly rents broke through the $2,000 level in the City of Toronto for the first time, reaching $2,044 in Q3-2016 based on an average unit size of 717 sf ($2.85 psf). In Toronto proper, average rents shot up 10% year-over-year to break $3.00 psf for the first time ($3.10 psf or $2,145). Growth was nearly as strong in the 905 region where rents increased by 7% from last year to $1,749 ($2.14 psf).
Purpose-built Rental Survey
Urbanation’s survey of purpose-built rental apartment projects completed across the GTA since 2005 (46 buildings totaling 8,293 units) revealed a vacancy rate of just 0.6%, unchanged from a year earlier. Rents across the sample averaged $2.45 psf, up 5% annually. The inventory of purpose-built projects under construction totaled 25 buildings and 5,678 units in Q3-2016, down 676 units from the previous quarter as four projects began occupancy. The total proposed inventory increased to 20,226 units, double the level from a year ago.