Housing affordability crisis in Vancouver and Toronto continues unabated: RBC
Rents for Toronto condos are expected to ease in 2019 after surging the most in at least eight years in 2018.
The average monthly rent in Canada’s biggest city jumped 9.3 per cent to $2,309 in 2018, according to a report from Urbanation on Friday. That’s the biggest yearly gain since the condo research firm began tracking the market in 2010 and more than double the 4.1 per cent average over the past eight years.
The increases were front-end loaded, slowing to 6.7 per cent in fourth quarter year-over-year from 7.6 per cent in the third, and an average of 11 percent in the first two quarters, Urbanation said. They’re forecast to average about 5 per cent in 2019, Shaun Hildebrand, president of Urbanation, said by phone.
“The emerging slowdown in rent increases will be a first step towards calming condo-price growth, which has faced continued upward pressure, partly due to investors looking to buy units and rent them out,” Hildebrand, said in an email.
Below are the key reasons Urbanation listed for the slowdown:
Lease activity in the suburbs of Toronto jumped 40 per cent in the fourth quarter from a year earlier, where the average rent was 13 per cent less than downtown at $2,520.
Average rental unit size fell to a record low of 709 square feet; studio leases jumped 44 per cent. Rents increased to a record rate of 11.3 per cent on a per-square-foot basis in the fourth quarter.
A total of 6,216 units were completed in the fourth quarter of 2018, the most in two years.
Purpose-built rentals under construction reached a 30-year high of 11,905 units, up 59 percent on the year. Almost 5,000 rental apartments are expected to be completed in 2019, the highest since the early 1990s. The average vacancy rate for rental apartments completed in the Toronto region since 2005 was 0.6 percent in the fourth quarter.