The Toronto Real Estate Board released its condo market and rental market figures for the second quarter of 2018, reporting strong price and rent growth.
“Condominium apartments have outperformed other housing types over the past year, in terms of price growth,” says TREB President Garry Bhaura. “It has been a seller’s market in many neighbourhoods for this home type, which is why we have continued to report average price growth more than twice the rate of inflation.”
The average selling price of a condo unit in the Greater Toronto Area through the MLS system increased 5.4% year-over-year to $561,338 in Q2-2018. In the City of Toronto, the average selling price jumped 6.5% to $603,480.
“First-time buyers continue to be a key driver of condominium apartment demand,” says Jason Mercer, TREB’s Director of Market Analysis. “The relative affordability of condos versus low-rise home types, especially with the onset of stricter mortgage qualification guidelines and generally higher borrowing costs, has also been a key factor underpinning tight condo market conditions and continued average price growth.”
Q2-2018 sales dropped down to 6,837, which is 16.5% lower than the same period last year. That said, listings also fell 15.9%. TREB says the fact that sales and listings decreased by a similar amount proves the market is stable.
“For many people, condominiums are the only realistic housing option, even if they may prefer a different lifestyle,” adds Bhaura. “There is simply not enough supply of housing to meet the need for home types between detached homes and condominium apartments. This could help provide affordable options for homebuyers and TREB looks forward to raising this issue during the upcoming municipal election campaign in our determination to find ways to get more of this type of housing into the market.”
For those struggling to get into the condo market, the rental market is where they’ll find a home, but things are getting tighter there, too. The average monthly rent of a one-bedroom leased through the MLS system in Q2-2018 was $2,055. There were 4,879 one-bedroom leases, which is 2.9% lower than last year.
“The demand for condominium apartment rentals remained strong compared to the number of units available for rent,” says Bhaura. “Current market conditions point to the fact that renters have little choice when it comes to finding a place to live. Governments need to look at ways to increase the supply of rental accommodation, both in terms of purpose-built rental properties and individual investor-held units. This would go a long way to easing the pace of rent growth in the GTA.”
The average monthly rent for a two-bedroom rental was $2,755, an 8.8% increase compared to Q2-2017. Two-bedroom leases jumped 1.2% year-over-year to 3,104. We wonder if the increase in two-bedroom leases is a sign of more single people unable to afford one-bedrooms.
“Recent government policy changes, including rent controls, have not alleviated the strong upward pressure on monthly rents for available condominium apartments in the GTA,” says Mercer. “New, investor-held condominium apartments entering the market have not been enough to provide the needed balance in the condo rental market. As a result, the strong competition between renters continues to sustain double-digit or near-double-digit annual average rent increases.”