The construction cranes seem to be everywhere you look in downtown Toronto, but finding a condo to call home is becoming increasingly more difficult, and costly, for a legion of desperate renters.
Recent statistics compiled by real estate consulting firm Urbanation show rental costs have spiked in tandem with a sudden supply shortage.
According to its annual report, condo rents in the Greater Toronto Area have risen nine per cent in the fourth quarter to an average price of $2,166. The average monthly price was even steeper in downtown Toronto at $2,392.
But it also appears more people are staying put in their condos, and a large number of construction projects remain incomplete, leaving fewer units available to renters.
“Lease activity declined in 2017 to 8.3 per cent, the lowest level of condo rental turnover since 2013,” Urbanation 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.”
But Urbanation believes the supply issues will embolden developers to continue building at a rapid pace.
“Persistently strong rent growth throughout 2017 was simply the result of demand fundamentals for renting far outweighing supply” said Shaun Hildebrand, Urbanation’s senior vice president.
“This 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.”
Here are some of Urbanation’s key findings.
- Average monthly rents grew by 9.1 per cent year-over-year in the fourth quarter to $2,166.
- Per-square-foot rents increased by 5.8 per cent to $2.93, marking a slower rate of growth than previous quarters due to compositional changes from a shift in activity to the suburbs.
- The number of units leased in the fourth quarter fell 11 per cent annually as listings dropped 16 per cent.
- Supply has been weighed down by low condo completions and reduced rental turnover rates.
- The average length of time between lease transactions increased to a high of 23 months.
- The share of units leased through companies as opposed to individuals was 10 per cent in the fourth quarter.
- Rents for available purpose-built units built since 2005 grew 10.8 per cent, with vacancy of 0.3 per cent.
- Rental development increased to a two-decade high of 7,184 units under construction.