Condominium rents in the Greater Toronto Area have continued surging.
According to Urbanation, during the third quarter of 2018, condo rents grew 9.4% year-over-year, hitting $3.26 per square foot, while monthly rents rose 7.6% annually, reaching $2,385. The average unit during the third quarter declined from 744 square feet to 731.
Lease transactions for condos reached a three-year high for third quarters at 8,196 units—that’s up 5% from one year ago thanks to a marginal supply boost. Units’ average time on market increased by a day to 11 from a year earlier, but the ratio of leases-to-listings dropped 2% to 86%. The share of units leased above asking during Q3-2018 dropped down to 26% from 29% last year.
“Rapid rent growth has persisted in the GTA for over two years now, making it very clear that much higher levels of supply are needed to create a balanced market environment,” said Shaun Hildebrand, president of Urbanation. “While increasing condo completions should begin to have at least some calming effect on rent increases next year, more upward momentum in purpose-rental construction is required to meet overall demand.”
New purpose-built construction starts dropped down to 826 during the third quarter compared to a year earlier, and that’s also a two-year low in addition to being well below it 2,635 starts in the second quarter of this year. However, there were 11,172 purpose-built rental units under construction—a 30-year high, and 56% more than the 7,167 units in Q3-2017.
There have only been 60 purpose-built rental buildings constructed since 2005 in the GTA, and the rents averaged $3.09 per square foot last quarter, which is 17% more than the third quarter of last year. However, that is largely because higher rent buildings have been completed over the last year, and the vacancy rate in these buildings was only 1.5% during the third quarter of this year, but still 0.9% higher than the same period in 2017.
Purpose-built rental inventory got a boost, hitting 39,750 units across 128 projects, which is up 30,981 proposed units from the third quarter of last year.