It looks like balance may be returning to the Greater Toronto Area’s condo rental market, according to the latest quarterly figures from the Toronto Real Estate Board.
In the third quarter of 2019 (Q3-2019), there were 10,800 condo apartments rented through the MLS system, which is 17.3% higher than the same quarter a year ago.
Listings during Q3-2019 increased more than 30% year-over-year, with 16,407 units hitting the rental pool.
“The fact that rental condominium apartment listings grew at a faster year-over-year pace compared to rental transactions suggests that the rental market has become better-supplied over the past year,” says TREB President Michael Collins. “Steady condominium apartment completions coupled with strong average rent growth have prompted many investor-owners to list their units for rent. If growth in rental listings continues to outstrip growth in rental transactions for a sustained period, we could see a more balanced market in the future.”
Though listings growth outpaced lease growth, average rent still went up, increasing 4.5% to $2,262 a month for one-bedroom units and 4.2% to $2,941 a month for two-bedroom units.
“Rental market conditions remained very tight in the GTA in the third quarter, as evidenced by average annual rent increases double the rate of inflation,” says Jason Mercer, TREB’s Chief Market Analyst. “With this being said, however, the pace of average rent growth has slowed noticeably over the past twelve months as we have seen an acceleration in listings. This suggests that renters are benefitting from more choice in the marketplace.”
One interesting thing that stands out in TREB’s rental report is that bachelor leases increased 24.4% and three-bedroom leases increased 29.2%, while one-bedroom leases only went up 18.6% and two-bedroom leases only increased 13.7%.
Is it possible that because of high rents, more people are opting for bachelor units or splitting the rent with more than one person in a larger three-bedroom unit? The average rent for a three-bedroom in Q3-2019 was $3,749 a month. Split three ways, that’s only $1,249 each. If you were to split the average two-bedroom with someone, you’d both have to pay around $1,470 a month.
With record high new condo sales in recent years, there will be more units hitting the market soon, so there’s a good chance listings growth will continue to outpace lease growth in the GTA. This should result in further rent growth moderation.