Canada's Condominium Magazine

Toronto-Area Rental Prices Soar as Vacancies Dwindle, Forcing Potential Buyers to Look in the 905

A recent report released by real estate consulting firm Urbanation showed that condo rental prices in the Greater Toronto Area rose 9 per cent in the fourth quarter as supplies dwindled. This brought the average price to $2,166 for the fourth quarter and $2,392 for the month. In fact, Toronto has the most expensive one-bedroom apartments in the country.

According to the PadMapper Canadian Rent Report, which analyzes rental data from active listings across the country, Vancouver was the most expensive city until January, when Toronto took over that position with a 2.5 per cent price increase that brought one-bedroom rentals in Toronto to $2,020, just slightly above Vancouver’s $2,000 median price.

Vancouver, however, still maintains its status as most expensive city when it comes to larger apartments and condos. Two-bedroom units in Vancouver, for example, are priced at $3,200 as opposed to Toronto’s $2,520.

 

Map containing data compiled by PadMapper, showing current median rental prices across Canada.
Credit: PadMapper, January 2018 Canadian Rent Report

 

Prices continued to increase as supply became limited, with the vacancy rate in the fourth quarter dropping to an all-time low of 0.3 per cent. Urbanation Inc. Senior Vice President Shaun Hildebrand stated that the limited supply and increased prices have bolstered confidence in developers looking to add more units to the pipeline, a trend that he says is vital to meeting future housing needs. Over 7,000 units were under construction by the end of the year, bringing rental development to its highest level in nearly three decades.

“The rental market has become severely undersupplied, which is likely to worsen following the latest round of mortgage insurance rule changes,” said Hildebrand in a news 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.”

 

Urbanation data.

 

According to Urbanation, “Lease activity declined in 2017 to 8.3 per cent, the lowest level of condo rental turnover since 2013,” they said. “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. At the same time, high rent levels and new rent control regulations are leading tenants to move less often, further reducing available supply.”            The increase in rental prices brought the per-square-foot cost up by 5.8 per cent, though this is a slower rate of growth compared to previous quarters, the result of compositional changes from a shift in activity to the suburbs. Additionally, the share of units leased through companies rather than individuals grew by 10 per cent in the fourth quarter.

According to the data provided by Urbanation, the rising costs and low supply have begun to push potential buyers into the 905 area. The majority of rentals leased through the Multiple Listings Service are condominiums, which account for a third of the region’s rental stock.

“With rent levels rising downtown and more condo projects finishing construction in the suburbs – and those units being offered for rent – we are starting to see some tenants looking at alternative options and starting to migrate into the 905 region where rents are quite a bit less expensive,” said Hildebrand.

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