Rental home investors saw their returns improve in the third quarter of 2019 as rents increased despite an increase in supply.
Figures from the Toronto Real Estate Board show that there were 10,800 condo apartment rentals handled by GTA Realtors in Q3 2019, a gain of 17.3% compared to a year earlier, while listings jumped 30.1%.
“Rental market conditions remained very tight in the GTA in the third quarter, as evidenced by average annual rent increases double the rate of inflation,” said Jason Mercer, TREB’s Chief Market Analyst. “With this being said, however, the pace of average rent growth has slowed noticeably over the past twelve months as we have seen an acceleration in listings. This suggests that renters are benefitting from more choice in the marketplace.”
The average one-bedroom condominium apartment rent was $2,262 in Q3 2019 – up 4.5% compared to Q3 2018 while the average two-bedroom rent was up by 4.2% to $2,941.
More balanced market ahead?
“The fact that rental condominium apartment listings grew at a faster year-over-year pace compared to rental transactions suggests that the rental market has become better-supplied over the past year. Steady condominium apartment completions coupled with strong average rent growth have prompted many investor-owners to list their units for rent. If growth in rental listings continues to outstrip growth in rental transactions for a sustained period, we could see a more balanced market in the future,” said TREB President Michael Collins.