When it comes to Toronto real estate, the rental prices are just as staggering as home prices. There are many factors that have contributed to the average rent in Toronto growing so significantly in the last few years.
For starters, as more and more would-be buyers are being priced out of the market unable to afford to buy a home in Toronto, the demand for rentals is at an all time high, pushing the vacancy rate to an all time low.
RENT CONTROL REPERCUSSIONS
In 2017, Kathleen Wynn implemented the Rental Fairness Act, which had repercussions in the way landlords began pricing their units and in the willingness — or lack thereof — for developers to build purpose-built rentals. Under the Ford government, they have since amended this to exempt any newly built or previously unoccupied apartments from rent control.
In our blog The Truth About Rent Control we elaborate on the reasons why the Rental Fairness Act may have protected a tenant’s rents from potential dramatic increases, but how it led to a whole new series of problems.
GROWING POPULATION IMPACTING THE AVERAGE RENT IN TORONTO
Another huge contributor to the fast rising average rent in Toronto is the low vacancy rate. The Huffington Post recently published that Toronto is the fastest growing city in the U.S and Canada. Toronto had an increase of 77,435 new residents between July 2017 and July 2018.
According to data from Urbanation, there are a record of 21,991 condo units expected to be completed in 2019. Nearly all of these condos were pre-sold and more than half of them were bought by investors. Pre-construction investors are large contributors to rental supply in Toronto.
HOW THE AVERAGE RENT IN TORONTO HAS INCREASED SINCE 2016
Let’s look at the numbers. Below you can see what the average rental price Toronto has had each quarter since 2016. Some key takeaways:
- Toronto Central has the highest rents regardless of unit type
- Rentals in Toronto’s east end have seen the largest overall rent increase since 2016
- Toronto’s east end remains the most affordable for rentals
AVERAGE RENT IN TORONTO 1 BEDROOM 2016-2019
AVERAGE RENT IN TORONTO 2 BEDROOM 2016-2019
AVERAGE RENT IN TORONTO 3 BEDROOM 2016-2019
Since 2016, the average rent in Toronto for one bedroom apartments has increased around 30%, two bedrooms have seen an average increase in rent of about 23% and three bedrooms an average of 24%.
Comparing this to the average rent increase the three years prior — between 2013 and 2016 — the average rent in Toronto rose an average of only 6% for one bedroom rentals, 12% for two bedrooms and 2% for three bedrooms; a fraction of the Toronto rent trends we’re seeing today.
WHAT THE AVERAGE RENT IN TORONTO 2019 MEANS FOR INVESTORS
With Toronto’s population on the rise from both immigration as well as our growing tech industry bringing a surplus of qualified residents, the high demand for available rentals will continue to climb.
With new build condos now exempt from rent control, investors who buy pre-construction Toronto condos can rest assured that their investments will be protected should interest rates rise.
While Toronto’s east end is still the more affordable option for rentals across the city, there are many new developments including East Harbour and new major transit infrastructure in the works that will see the demand for rentals in the east end grow drastically in the years to come.
If you’re looking for a good investment opportunity in Toronto be sure to check out our current pre-construction projects or book a call with us to discuss your goals and find the best investment for you.