Photo: Neal Jennings/Flickr
A record number of renters in the Greater Toronto Area looked to condominium apartments for housing in this year’s third quarter, according to an Urbanation report released today.
A total of 8,398 condo apartments were rented via the city’s MLS system from July to September in the area, an 18 per cent increase over the same period in 2014.
“Rental demand continues to strengthen due to quickly rising housing prices and increased migration into core areas of the GTA,” said Shaun Hildebrand, Urbanation’s senior vice president, in a statement.
For the second straight quarter, GTA condo leases outpaced listings, which were nevertheless up 11 per cent year-over-year. Urbanation said this was a “departure from the trend witnessed over the past couple years.”
In Q3, the ratio of leases-to-total listings hit a record of 84 per cent. New projects were especially in demand, as 95 per cent of these listings that were registered and absorbed in the quarter were leased in 15 days on average. That’s four days less than the market-wide average of 19 days.
However, this demand has not led to a surge in rental prices tracked through the MLS. Per-square-foot rents for condo apartments and purpose-built rental units in the core of the city were “virtually unchanged,” Urbanation said.
On average, renting a condo cost $2.49 per square foot in Q3, a 2 per cent annual increase.
Meanwhile, among purpose-built rentals units completed since 2005, rent per square foot was $2.34. These units had a low vacancy rate of 0.6 per cent.
Including all of the Greater Toronto Area, condo rents only increased 0.4 per cent. That’s considerably lower than the annual-rental-increase limit set by Ontario for the year, which is currently 1.6 per cent.
Some cheaper suburban markets — Etobicoke, Scarborough, Markham, Vaughan, and Mississauga — did see higher increases in the 3 to 5 per cent range, Urbanation noted.
“This is due to increasing supply of newly built units and rising demand for more affordable rentals,” Hildebrand told BuzzBuzzHome News in an email.
Across the Greater Toronto Area, the average size of a unit rented was 743 square feet, down from 767 square feet a year ago. The average monthly rent for last quarter’s average-sized unit was $1,850. Last year’s larger average-sized unit cost renters an average of $1,870.
In the third quarter there was a spike in purpose-built rental construction. During that period, 6,523 purpose-built rental units were under construction — the highest level in more than a quarter of a century — representing a 76 per improvement over the second quarter. Eighty per cent of these units are in the City of Toronto.
Currently, developers are proposing 10,117 more purpose-built rental units across the Greater Toronto Area. In the third quarter alone, 3,820 of these units were proposed.
The rise in rentals — and the number of proposed purpose-built rental units — witnessed in Toronto is in line with a recent report from Urban Land Institute and PricewaterhouseCoopers.
Housing affordability concerns have spawned “permanent renters,” creating opportunities for investors to cater to this growing demographic, according to this year’s edition of the annual Emerging Trends in Real Estate report.