Condo apartment owners in the GTA saw higher returns on their investments in 2018 with rents setting a new record.
Urbanation, which has been tracking rents in the market since 2010, says last year’s 9.3% increase was the largest it has seen, beating the previous year’s 8.3% growth and the 8-year-average of 4.1%.
However, on a year-over-year basis, rent growth moderated in the fourth quarter to 6.7%, representing the slowest annual pace since Q1-2017 with the average monthly cost reaching $2,310.
Although the figures suggest that renters are adapting to higher rents – with total lease activity for studios up 44% and for one-bedroom apartments rising 31% - growth in rents may be limited by new supply and affordability issues.
“Recent housing policy changes, combined with strong demand fundamentals and supply constraints led to record growth for rents in the GTA last year,” said Shaun Hildebrand, President of Urbanation. “These factors should continue to keep upward pressure on rents, but to a lesser degree in 2019 as affordability becomes a bigger issue and more condominium and rental units finish construction.”
Supply set to rise
The total number of purpose-built rental apartments under construction in the GTA reached a more than 30-year high of 11,905 units at the end of 2018, rising by 59% from 7,494 units at the end of 2017 and more than twice the level from two years ago at the end of 2016 (5,429).
This year close to 5,000 purpose-built rentals are expected to reach completion, representing the highest level since the early 1990s. Longer-term future supply represented by the inventory of projects proposed for development reached 40,688 units, up from 34,559 units at the end of 2017 and 27,591 units at the end of 2016.
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