Toronto-area rents may be hitting a ceiling at about $2,515 a month, according to research. The rapid rise in rents that saw prices increase 30 per cent over the last few years has moderated somewhat.
Market research firm Urbanation says rents for purpose-built apartments barely budged between the second and third quarter of this year. It found that growth in the last quarter, 6.1 per cent year-over-year, was the lowest it’s been in two years.
The findings suggest that the high cost of rent is prompting more tenants to share, or move to smaller units and less expensive areas of the region, said an Urbanation press release.
“There’s certainly evidence that (rents) are bumping up against the maximum that the average renter is willing or able to pay,” said senior consultant Joel Conquer.
The news is mixed for tenants struggling to afford an apartment, he said.
“At least, we’re seeing stuff being built. It’s just probably not being built fast enough to help keep those rents in check,” said Conquer.
While this year has also seen the highest number of apartment completions, at 3,157 units, in 25 years, rental starts this year to date were down 47 per cent year over year to 2,540 units.
This could be a function of municipal approval timelines and developers getting their financing in order, said Conquer. He stressed that the numbers are still relatively small. A delay or cancellation of a single building can have a big impact on the total number of units.
Although completions are up, it’s also a relatively small number compared to the number of people looking to rent.
“It’s difficult to say what the rest of the year will bring, but it’s probably not going to be as good as last year, which I think was among the best years we’ve had in the last decade or so,” said Conquer.
Completions are expected to remain stable over the next couple of years, which should keep rents down, said Urbanation.
The number of rental projects in the planning stages rose to 52,839 projects in the third quarter, up from 42,432 a year ago.
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There is more interest in building rentals because of a provincial move last year to drop rent controls on new units and higher rents that make the projects more attractive to developers.
Of the 11,413 rental units under construction in the region in the third quarter, more than 80 per cent were in the City of Toronto.
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