Latest data compiled by real estate consultant firm Urbanation showed that rents in the Greater Toronto Area have spiked upwards in the last three month of 2017 in concert with a shortage of available supply.
According to Urbanation’s annual report, the average condo rent cost in the GTA has increased by 9% in Q4, up to $2,166. Downtown Toronto saw an even steeper growth, up to $2,392.
“Lease activity declined in 2017 to 8.3%, the lowest level of condo rental turnover since 2013,” Urbanation noted in its study. “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,” Urbanation added.
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“Persistently strong rent growth throughout 2017 was simply the result of demand fundamentals for renting far outweighing supply,” according to Urbanation senior vice president Shaun Hildebrand. “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.”
Supply has been slowed 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, while the share of units leased through companies as opposed to individuals was 10% in the fourth quarter.
Rents for available purpose-built units built since 2005 grew 10.8%, with a vacancy rate of 0.3%. Rental development increased to 7,184 units under construction, a two-decade record high.
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