Canada's Condominium Magazine

Average monthly rents up 11.2% to $2,302 for average 732 square foot unit; construction growth at a 30-year high

The good news: construction is at a 30-year high — much needed with a severe inventory shortage.

The bad news (at least, for tenants): rents are up 11.2% year-over-year to an average $2302 for the average-sized unit of 732 square feet.

The latest Q2-2018 report from Urbanation Inc. might be good news for landlord/owners, but the increasing rents are high enough to push would-be renters into the buyers market; after all, if you’re paying $2302 per month for 732 square feet, maybe it’s better to put that money into a mortgage? That is, if you can swing the downpayment.

 

Average condo apartment rental changes for Q2 2018 show over 11% gain.

 

In the condo market, inventory remained “exceptionally tight” according to the report, with only 25,955 units leased — the lowest 12-month level in three years. Meanwhile, in purpose-built rentals, a total of 2,635 units started construction, raising the total under construction to 11,073 units. This represents a 69% gain over the same quarter last year at only 6,539.

 

Condo leases, sizes and prices with increases as a percentage for Q2 2018 from Urbanation from TREB data.

 

Among the findings in the latest report:

  • Average monthly rents for condo leases signed in Q2-2018 grew by 11.2% year-over-year to $2,302 based on an average unit size rented of 732 sf
  • Per square foot rents increased by 8.7% annually to $3.14, surpassing $3.00 psf for the first time
  • Average rents grew strongest for studios (+12%) and one bedroom units without dens (+13%) to $1,720 and $1,968, respectively
  • The number of condo lease transactions fell for the third straight quarter, declining 8% to 7,754 units as supply continued to drop
  • Lease activity has been weighed down by declining rates of turnover and a low volume of new condo project registrations (i.e. final closings for new completions), which plunged by 28% from a year ago to 3,264 units in Q2-2018
  • New purpose-built rental construction surged in Q2, with 2,635 starts recorded during the quarter, raising the total inventory under construction to 11,073 units — the highest in at least 30 years
  • The number of planned rentals also grew, reaching a total of 120 projects and 37,403 units
  • Operators of rental buildings completed since 2005 in the GTA raised rents for available units by 11% compared to last year, reaching an average of $2.97 psf. Vacancy rates in these buildings averaged just 0.3%, with an availability rate of 1.5%.

 

Rental price increases by area, including Toronto, Mississauga, Markham and Richmondhill.

 

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