Renting in large cities is never cheap, and Toronto is certainly no exception. However, 2018 saw huge leaps in the cost of renting in the city due to several factors. As a result of sharply rising house prices in Toronto, more people are choosing to rent for longer, increasing the demand for rental properties.
More and more renters have been choosing condos over houses over the last few years, as rent is generally much cheaper; however, this increase in demand for condos has caused rent to skyrocket, particularly over the last year.
The good news is that rental increases in condos in Toronto began to slow down towards the end of 2018, and this trend could be set to continue throughout 2019. Here’s why.
Shift to the suburbs
An increasing number of renters are moving out of the city and into the suburbs over recent months. Many of Toronto’s suburbs are evolving from rural areas into more urban landscapes, encouraging more people to move there, and taking the pressure off the city center.
This is good news for those who are looking to lease condos in downtown Toronto, as a decrease in demand generally leads to a decrease in price – or at least the increases slowing down.
As urbanization continues, the suburbs will continue to become more appealing to renters, which may eventually encourage a better rental market in downtown Toronto.
Over recent years, we have seen an increase in the number of larger condos available as they became a more popular housing option for families.
However, throughout 2018 we have seen a jump in the number of smaller units being rented out. An increase in the supply of smaller units is good news for renters on a budget, as they are generally more affordable.
Furthermore, a decrease in the demand for larger condos could also see the rental prices decreasing on these 2-3 bedroom units, leading to a lower price per square foot overall.
The number of condos available to lease has seen an unusually large jump, with over 6,000 new units completed in the final quarter of 2018. If supply continues to go up at this accelerated rate, then landlords will be forced to compete by lowering prices. Increased supply can only mean more affordable rental properties available.
To meet with the demand for rental accommodation in the city, an increasing number of condos are being designed specifically to be rented out.
The number of purpose-built rentals currently under construction has reached its highest point in 30 years, with around 5,000 rental condos expected to be completed this year.
Whilst demand will continue to grow, this is the largest number since the early 1990s, suggesting that supply may increase faster than demand in 2019. With vacancy rates of around 0.6 towards the end of 2018, it is reassuring for renters to know that the situation seems set to improve.