GTA’s condo rental market has a breakout year

The number of condos rented in the Greater Toronto Area in 2014 topped 2013, with a growth of 15 per cent, to 22,765 units – great news for investors in the condo market.

A report by Urbanation had more good news for investors: average condo rents grew by one per cent year-over-year in the fourth quarter of 2014. For the year as a whole, average monthly rent appreciated by 0.8 per cent.

“The condo rental market grew into its shoes in 2014,” said Shaun Hildebrand, senior vice president of Urbanation.

“The rental market’s proven stability and consistent growth is encouraging as we remain in a scenario of high condo completions over the next couple years.”

Additionally, demand and supply growth were aligned during the fourth quarter as condo rental transactions grew at a similar pace to listings, which increased 10 per cent year-over-year and held the ratio of leases-to-listings to a level consistent with previous fourth quarters, at 66 per cent.

Hildebrand added: “Demand proved strong enough to absorb the market’s greatest amount of new supply in history, while also revealing an equilibrium for rent levels.”

Dan Barnabic, the author of The Condo Bible for Canadians, said these huge numbers support the theory that condos are mostly bought by investors who are forced to lease them out as the pool of end-buyers is drying out.

“Any complex that is heavily rented out (25% or more) becomes stigmatized as an apartment building," he added. 

"As a result, buyers become leery to purchase into those complexes for the fear that tenants, who are not the stakeholders in the property, would not take as good care of the common elements, such as hallways, elevators, lobbies and gymnasiums, as the resident unit owners.”

Keep an eye out for CREW’s report on condo investing in the February/March issue.
 

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