Photo: James Bombales
Toronto home sales might have fallen in the first quarter of 2018, but rents certainly didn’t.
According to a report released today by Urbanation, the average monthly rent for a condo in Toronto jumped 10.7 per cent to $2,206 in Q1, the second biggest increase since 2010 (after Q3 2017’s 11.5 per cent jump.)
That jump in prices comes as supply levels continue to fall. The number of rented condo units dropped 12 per cent year-over-year in Q1, with the level of available new condos falling to 1,945, the lowest level in eight years.
Housing Market News Alerts
Sign up for news alerts on the Toronto housing market
And for those hoping that supply levels might increase as condo investors place more of their units on the market, it’s worth noting that the average annual income required to buy an average Toronto resale condo has also gone up. It’s now $100,000, up from $77,000 this time last year.
According to Urbanation VP Shaun Hildebrand, that jump in price can be partially attributed to a new mortgage stress test, which came into effect on January 1.
“Without the [mortgage stress test], the average required income [to purchase a home in the GTA] falls to $86,000,” writes Hildebrand, in the report. “One year ago the required income to buy the average priced unit was $77,000, and two years ago it was $64,000.”
Yet despite these increases, Hildebrand writes that it is still less expensive to rent a condo than to own.
“For the average sized 740 square-foot unit rented in Q1-2018, the mortgage principal and interest payments (with 20 per cent down) plus condo fees would be $170 a month higher than the rents of $2,206,” he writes.
The good news? It’s possible that condo rents could start to go down later in the year, as the market begins to balance out further.
“The situation should improve at least somewhat starting in the second half of the year as more condo projects under construction reach completion and buyers begin to adjust to the new mortgage rules,” writes Hildebrand.