Condo prices surge 10% with rental squeeze

Toronto’s supply of smaller apartments also dwindled over last year

Reticent home buyers, who are staying in their apartments longer, have helped push up Toronto region condo rents 10 per cent in the third quarter compared with the same time last year.

The supply of smaller apartments also dwindled during that period, according to a third-quarter study by real estate market research company Urbanation.

It found the average monthly rent of condos offered for lease on the Toronto Real Estate Board’s Multiple Listing Service (MLS) averaged $2,220 — $220 higher than a year ago.

The rental squeeze was attributed to a surge in migration and declining home ownership following a peak in housing prices earlier this year, combined with tougher lending rules and the Ontario government’s housing market cooling policies, including a foreign buyers tax.

“This has been compounded by lower tenant turnover, which has been further encouraged through the extension of rent control and a slowdown in completions of condominium and purpose-built rentals,” an Urbanation press release said.

While the total number of leases signed during the last quarter remained flat at 7,761 units, the smallest apartments were scarce.

The number of available one-bedroom units without dens dropped 11 per cent and studio inventory was down 3 per cent.

Rents on those tight condos rose, however, by about $200 over last year to $1,839 for the one-bedrooms and $1,672 on the studios.

The average two-bedroom apartment rented for $2,498 — $2,510 with a den. Three-bedroom units averaged $3,065.

Tenants had to be fast to snap up the rental condos, too. The average listing lasted only10 days, the briefest period on record.

Meantime, the ratio of leases to listings hit an all-time 88-per-cent high. The1,048 MLS condo lease listings at the end of September was the equivalent of two weeks’ supply, Urbanation said.

Its report was released the same day the Ryerson City Building Institute and Evergreen, an urban sustainability agency, released a joint report calling for 8,000 new purpose-built rentals to be built annually for the foreseeable future. That would return the Toronto region’s vacancy rate to a healthy 3 per cent, about double the current rate, that report said.

The Ryerson Institute and Evergreen also called for less reliance on condo rentals, believed to account for about a third of all rental housing in Toronto.

Urbanation’s Shaun Hildebrand said about 70 per cent of those are listed on MLS.

There were proposals to build 30,980 purpose-built rentals in the Toronto region in the third quarter of the year — about the same number as the second quarter.

The number of rental apartments under construction increased to 6,146, the highest level in two years, Urbanation said.