TORONTO – October 11, 2018: Urbanation Inc., the leading source of information and analysis on the GTA condominium and rental markets since 1981, released its Q3-2018 rental market results today.
Highlights of the release include:
- Rents for condominiums leased in Q3-2018 grew 9.4% year-over-year to an average of $3.26 psf
- Average monthly rents rose by 7.6% annually to $2,385 as the average unit size leased in Q3-2018 declined to 731 sf from 744 sf in Q3-2017
- The number of condominium lease transactions reached their highest third quarter level in three years at 8,186 units, rising 5% from a year ago as slightly more supply came into the market
- Market conditions eased marginally in Q3 but still remained exceptionally tight. The average time on market edged up to 11 days from 10 days a year earlier, while the ratio of leases-to-listings slipped to 86% from 88% in Q3-2017, and the share of units leased for above asking rent declined from 29% last year to 26% in Q3-2018
- New purpose-built rental construction starts slowed to 826 units in Q3-2018, falling from a recent high of 2,635 starts in Q2-2018 to their lowest quarterly level of the past two years. The total inventory of purpose-built rentals under construction moved up to 11,172 units — the highest level in more than 30 years and 56% higher than a year earlier (7,167 units)
- The 60 purpose-built rental buildings completed since 2005 in the GTA averaged rents of $3.09 psf in Q3-2018 for available units, up 17% from a year ago, partly due to the completion of higher rent buildings over the past year. The availability rate within these buildings was 1.5% in Q3-2018, rising from a low of 0.9% in Q3-2017
- Pressure is expected to be taken off rent growth next year as a record 28,163 apartments reach completion, including 4,419 purpose-built rental units
- The inventory of proposed purpose-built rentals increased to a high of 39,750 units across 128 projects, up from 30,981 proposed units a year ago in Q3-2017
“Rapid rent growth has persisted in the GTA for over two years now, making it very clear that much higher levels of supply are needed to create a balanced market environment,” said Shaun Hildebrand, President of Urbanation. “While increasing condo completions should begin to have at least some calming effect on rent increases next year, more upward momentum in purpose-rental construction is required to meet overall demand,” added Hildebrand.
Accelerated Rent Growth Quickly Pushes Lease Activity into Higher Brackets
Despite the uptick in leasing activity in the third quarter, rental transaction volume in the year-to-date period remained 4% lower than last year, adding pent-up demand to the market and keeping strong upward pressure on rents. The 9.4% growth in per sf rents recorded in Q3-2018 accelerated from the 8.7% annual rate in the previous quarter to reach its fastest pace over the past year. The strength in rent growth caused the number of units leased for less than $1,800 per month in Q3-2018 to drop by 65% compared to Q3-2017. At the same time, the number units renting for more than $2,500 per month surged by 43%. High rents are creating strong demand for studio units, which saw a 32% annual jump in lease volume during the quarter, and a 9% increase in average monthly rents to $1,823. The average rent for a one bedroom (without a den) surpassed $2,000 for the first time, rising 11% annually to $2,056. Two bedroom lease volume declined by 5% from last year, with average rents up 9% to $2,810.