If you’re a renter in the GTA then we’ve got some, maybe not so shocking, news for you.
Rental prices are out of control.
The following information and statistics are from a recent Urbanation report that highlights their Q3-2018 rental market results for the GTA.
It may come as no surprise but rent prices have drastically increased.
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According to the report, rent prices for condominiums leased in Q3-2018 grew to 9.4 per cent year-over-year to an average of $3.26 per square foot (psf).
The average monthly rent cost rose by 7.6 per cent annually to $2,385 as the average unit size leased in Q3-2018 declined to 731 square feet from 744 square feet in Q3-2017.
The number of condominium lease deals reached their highest third quarter level in three years at 8,186 units, rising 5 per cent from a year ago as more supply came into the market
New purpose-built rental construction starts slowed to 826 units in Q3-2018, falling from a recent high of 2,635 starts in Q2-2018 to their lowest quarterly level of the past two years.
The total inventory of purpose-built rentals under construction moved up to 11,172 units — the highest level in more than 30 years and 56 per cent higher than the year before (7,167 units).
The 60 purpose-built rental buildings completed since 2005 in the GTA averaged rents of $3.09 psf in Q3-2018 for available units, up 17 per cent from a year ago, partly as a result of the completion of higher rent buildings over the past year.
Despite the increase in leasing activity in the third quarter, rental transaction volume in the year-to-date period remained 4 per cent lower than last year, adding pent-up demand to the market and keeping strong upward pressure on rents.
The 9.4 per cent growth in per square foot rents recorded in Q3-2018 rose from the 8.7 per cent annual rate in the previous quarter reaching its fastest pace over the past year.
These high rent prices are creating high demand for studio units, which saw a 32 per cent annual jump in lease volume during the quarter, and a 9 per cent increase in average monthly rents to $1,823. The average rent for a one bedroom (without a den) studio unit surpassed $2,000 for the first time, rising 11 per cent annually to $2,056.
Two bedroom lease volume declined by 5 per cent from last year, with average rents up 9 per cent to $2,810.
Pressure is expected to be taken off rent growth next year as a record 28,163 apartments reach completion, including 4,419 purpose-built rental units.
“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,” Shaun Hildebrand, President of Urbanation, in the report.
“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.”
Table image is courtesy of Urbanation.