Investors are benefitting from condo renters who can’t afford to get into Toronto’s hot housing market, according to a new report from Urbanation, which shows that rentals have grown 22 per cent.
“Rental demand in Toronto continues to defy expectations,” said Shaun Hildebrand, Urbanation’s senior vice president.
“Absorptions have grown in tandem with record levels of condo supply and rents have proven remarkably resilient. It’s actually surprising there hasn’t been more action on the purpose-built rental development front.”
Hildebrand added that purpose-built units represent only three per cent of total apartment units proposed for development.
Urbanation’s 2015 second quarter report, which was published today, shows that 8,200 units were rented during that period – a record that doubles the rate of growth recorded in the previous few quarters.
With more renters settling for condos due to Toronto's high-priced housing market, investors are cashing in as demand continues to grow among millennials and other groups.
While the growth in supply wasn’t able to keep up with demand in the second quarter of 2015, the average condo was leased in 24 days. The high rate of supply hasn’t stopped construction, though, as 3,667 units are underway and a total of 9,350 units are proposed for development.
Total listings increased by 14 per cent year over year, pushing the ratio of leases-to-listings to 79 per cent, from 74 per cent last year.
According to the report, condo apartment rent growth accelerated to 4.6 per cent after averaging less than one per cent in annual growth since the beginning of 2014, lifting rents to a new high of $2.48 per square foot.
Average monthly rents increased for the first time in nearly two years, even though unit sizes continued to drop. Monthly rents grew 1.7 per cent to $1,817 while average sizes for rented units fell to an all-time low of 734 square feet.
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