Photo: James Bombales
Demand for rental housing reached a fever pitch in Toronto last year, and prices shot up in response.
According to an Urbanation report released Friday, rent prices grew a whopping 9.1 per cent year-over-year in the last quarter of 2017, bringing the average monthly rent to $2,166.
What’s more, rental prices grew 12.4 per cent quarter-over-quarter in Q4. “The continued tightening in market conditions caused rents to rise,” writes Urbanation senior VP Shaun Hildebrand, in a statement.
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In total, 27,219 GTA condo apartments were rented in 2017, a bump of 1 per cent from 2016. But Hildebrand is quick to point out that that, as a share of the entire stock of condo units, rental activity declined by 8.3 per cent, the lowest level of condo rental turnover since 2013.
“Lower condo rental supply in 2017 was the result of an increased share of units resold as investors took advantage of quickly rising condo prices, as well as a decline in new project completions to a four-year low of 15,827 units registered in 2017,” he writes.
High rent and new rent control regulations meant that tenants moved less in 2017, adding to already tight levels of rental supply. Yet construction of purpose-built rental buildings reached a 25-year high of 7,184 units in 2017.
“A total of 3,644 units began construction last year, including 1,198 in Q4,” writes Hildebrand. “After some cancellations and a pause in new applications following the new rent control rules earlier in the year, the inventory of proposed purpose-built projects increased to 33,787 units are year-end, with 5,410 units during Q4.”
Hildebrand says that 2017’s strong rent growth can be attributed to simple fundamentals: high demand, low supply. Those same fundamentals are to thank for the additions to the city’s rental stock.
“[Demand fundamentals for renting far outweighing supply] has raised the confidence of developers to add more units to the pipeline, a trend that will need to continue in order to meet future housing needs for the GTA,” he writes.