According to Urbanation, 1,849 new rental units began occupancy since the start of 2019. The amount of new rental completions marks a 25-year high for the GTA. Since 2005, only 13,520 “purpose-built rental units have been brought to market,” underscoring a serious lull in the market over nearly the last 15 years.
“The latest data shows that market conditions remain tight for rentals in the GTA, with continued upward pressure on rents,” said Urbanation President Shaun Hildebrand. “However, we are starting to see the early signs of some relief emerging as more supply enters the market from both new purpose-built rentals and condo rentals.”
Rental deliveries and completions are expected to grow as the year progresses, meaning that the rental market has the potential to rebalance and perhaps reduce the rate at which rental prices are increasing across the GTA.
“As rents have risen to new highs and population inflows into the GTA have surged, there has been a strong shift in demand to smaller units,” he said. “It’s pretty clear that rentals of all types are needed, but some projects have also experienced really good success with larger units that cater to couples, families and downsizers.”
The report found that the first quarter of the year saw strong demand for newly completed rental buildings while vacancy rates remained low (0.6%) within those purpose-built projects built in 2005 or after.
The cost of rent grew 5% year-over-year looking at the same buildings. Those purpose-built projects saw average rents of $2,398 or $3.25 per square foot. Condo rents grew 7.7% per square foot this quarter compared to 9.2% seen in the fourth quarter of 2018.
“Condominium rent growth is heading towards a more moderate pace relative to the past couple of years as rental affordability challenges have become greater and more supply is entering the market from projects finishing construction,” the report said.
“Although the volume of condominiums leased through MLS grew 13 per cent year-over-year in Q1-2019 to 6,005 units, supply grew faster than demand last quarter, pushing down the ratio of leases-to-listings to 73% -- the lowest level in four years.”