According to Urbanation Inc.’s report on Greater Toronto Area real estate during the third quarter of 2016, the number of condo apartments rented in the GTA through the MLS system fell by nine per cent from a record high last year to 7,651 units.
Activity slowed due to a 13 per cent drop in listings as the number of units in new projects registered during the third quarter fell by 30 per cent year-over-year. The leases-to-listings ratio reached a new record high of 89 per cent, while available listings at the end of the quarter fell to 930 units, a five-year low.
Market conditions became very tight during this quarter, as the average condominium for rent spent about 12 days on the market, while the number of units renting for above the asking price more than doubled from one year ago. This resulted in a nine per cent annual price increase to a record $2.71 per square foot, 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, in a press release. “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.”
The average monthly rent surpassed $2,000 in the City of Toronto for the first time, reaching $2,044 in the third quarter of 2016 based on an average unit size of 717 square feet ($2.85 per square foot). In Toronto proper, average rents jumped 10 per cent year-over-year to surpass $3.00 per square foot for the first time, reaching $3.10 per square foot or $2,145). Growth in the 905 region was nearly as strong, as rents increased by seven per cent year-over-year to $1,749 per month or $2.14 per square foot.
Urbanation’s survey of purpose-built rental apartment projects completed across the GTA since 2005 found the vacancy rate sits at just 0.6 per cent, which is unchanged from one year ago. Rents across the sample averaged $2.45 per square foot, up five per cent annually. There were 25 purpose-built projects and 5,678 units under construction in Q3-2016, down 676 units compared to Q2-2016 as four projects began occupancy. The total proposed inventory increased to 20,226 units, which is double the number from one year ago.