Condo prices surge 10% with ren­tal squeeze

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

Toronto Star - - BUSINESS - TESS KALINOWSKI REAL ES­TATE RE­PORTER

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.

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