q4-16 gta apartment market overview - urbanation · 2017-07-06 · gta apartment market overview...

GTA Apartment Market Overview Report Q4-2016

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Greater Toronto Area Apartment Market Overview Report Q4-2016


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INTRODUCTION Urbanation has been providing market research, in-depth market analysis and consulting services to the condominium industry since 1981. Urbanation uses a multi-disciplinary data collection approach that combines empirical research techniques with first-hand observations and site visits. On a quarterly basis, Urbanation tracks the new construction, resale condominium, rental condominium and purpose-built markets in the Greater Toronto Area.

The following report is intended to provide summary-level statistical trends drawn from our quarterly surveys and proprietary database on three major segments of the local high-rise market (new, resale, and rental), utilizing key indicators of demand, supply, and pricing.

This report has been prepared solely for informational purposes. Urbanation assumes no responsibly for losses sustained as a result of implementing any decisions that have made based on the information provided.

TABLE OF CONTENTS Section Page(s)

1.0 Summary of Key Results 3

2.0 Demand Indicators

New Condominium Apartments 4-5

Resale Condominium Apartments 6-7

Rental Apartments 8-9

3.0 Supply Indicators

New Condominium Apartments 10-12

Resale Condominium Apartments 13-14

Rental Apartments 15-17

4.0 Price / Rent Trends

New Condominium Apartments 18

Resale Condominium Apartments 19

Rental Apartments 20


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1.0 SUMMARY OF KEY RESULTS § Demand for Apartments Reaches New Highs:

o New condominium apartment sales increased 34% in 2016 to 27,217 units — 48% above the 10-year average of 18,422 sales.

o A record 90% of units in development were pre-sold at year-end.

o Resale condominium apartment sales grew 22% in 2016 to 25,328 units — 50% higher than the 10-year average of 16,902 sales.

o The ratio of resales-to-listings rose to a record 80% in Q4-2016, pushing conditions deep into a seller’s market.

o Rental condo apartment leases slipped by 1.4% in 2016 from a record high to 27,217 units as lower turnover occurred.

o The ratio of condo leases-to-listings reached a record 77% in Q4-2016 while the average time on market for condo rentals dropped to 13 days.

§ Apartment Supply on the Decline:

o New condo apartment launches declined by 6% in 2016 to 18,466 units (in line with the 10-year average), while unsold inventory in development plunged by 47% annually to 9,923 units — equal to only 4.4 months of supply.

o Condo apartment completions fell to a three-year low of 18,017 units in 2016, but are projected to rise back above 20,000 units in the coming years.

o Listings within newly completed buildings have continued to trend lower, with total resale listings in Q4-2016 declining 14% year-over-year and active listings at year-end down 58% to equal a record low 0.5 months of supply.

o The share of newly completed condo apartments listed for rent declined to a two-year low of 25.6% in Q4-2016, while total condo rental listings fell on an annual basis (-5.5%) for the third consecutive quarter.

o Vacancy rates for purpose-built rentals completed since 2005 averaged 0.6% in Q4-2016. The number of purpose-built rentals under construction declined to 5,133 units, while the number of rentals proposed for development swelled to 27,812 units.

§ Price and Rent Growth Accelerate:

o Asking prices for remaining new condo apartment inventory grew by 7% annually in Q4-2016 to an average of $646 psf.

o Resale condo apartment prices increased by 16% in Q4-2016 to reach $533 psf, more than three-times the 10-year average of 5.2%.

o Condo apartment rent growth rose to 12% in Q4-2016, with rent levels reaching a new record of $2.78 psf.

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2.0 DEMAND INDICATORS

New Condominium Apartments • At year-end 2016, Urbanation was tracking a total of 430 new

condo apartment projects in active development in the GTA, comprising 106,657 units across the pre-construction, under construction, and recently completed phases.

• New condo apartment sales reached a record high 27,217 units in

2016, rising 34% over 2015 (20,296) and 48% above the 10-year average of 18,422. Sales surpassed the previous peak in 2011 when 25,532 units sold. A record 73% of available inventory for purchase was absorbed during the year, up from 52% in 2015 and 58% in 2011.

• Quarterly new condo apartment sales volumes continued to trend

higher during the year, reaching 7,422 units in Q4-2016 — an 18% year-over-year increase. Sales volume has remained above underlying trend levels (approx. 5,500 sales per quarter) for five consecutive quarters, which follows seven quarters of near-trend-level sales from Q1-14 to Q3-15 and seven quarters of below-trend-level sales from Q2-12 to Q4-13.

25,532

20,296

27,217

0

5,000

10,000

15,000

20,000

25,000

30,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 2.1Annual New Condo Apartment SalesGreater Toronto Area: 2006 to 2016

Source: Urbanation Inc.

2006-2016 Average = 18,422

7,422

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1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Figure 2.2Quarterly New Condo Apartment Sales

Greater Toronto Area: Q1-2010 to Q4-2016


trendline

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• Absorption rates for new condo apartment launches (i.e. new units

opened for pre-sale) reached a record 78% in 2016, up from 56% in 2015 and surpassing the previous high of 65% in 2011. The average annual level of absorption for new launches was 57% over the past 10 years.

• The absorption of existing inventory (i.e. from projects launched

prior to the current year) also reached a new high of 68% in 2016, jumping from 47% in 2015.

• As a share of total new condo apartments in development, 90% of

units were pre-sold at the end of 2016, up from 81% at the end of 2015 and a decade average of 78%. Units in pre-construction were 81% pre-sold (up from 64% in Q4-15), units under construction were 93% pre-sold (from 86%) and units in the occupancy phase were 97% pre-sold (from 93%).

78%

68%

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10%

20%

30%

40%

50%

60%

70%

80%

90%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 2.3Annual Absorption Rates for New Launches and Pre-existing Projects

Greater Toronto Area: 2006 to 2016

New Launches Pre-existing Projects


90%

50%55%60%65%70%75%80%85%90%95%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 2.4Share of New Condo Apartments Pre-soldGreater Toronto Area: Q4-2006 to Q4-2016


2006-2016 Average = 78%

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Resale Condominium Apartments • Annual resale condo apartment transactions increased 22% in

2016 to a new high of 25,328 units, rising from 20,272 units in 2015 and a 10-year average of 16,902 units. The increase in resale activity in 2016 was particularly noteworthy in the context of the prior 10 year period when sales remained fairly flat on an annual basis. Combining new and resale condo apartments, sales totaled 52,545 units in 2016.

• As a share of the total condo apartment stock, resale activity

equalled an annual turnover rate of 8.1% in 2016. Turnover was up from 7.1% in 2015, but was generally in line with the 10-year average of 7.7%. Resale turnover rates fell below average from 2012 to 2015 after reaching as high as 9.6% in 2017.

20,772

25,328

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5,000

10,000

15,000

20,000

25,000

30,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 2.5Annual Resale Condo Apartment Sales


Source: Urbanation Inc., TREB/MLS

2006-2016 Average = 16,902

8.1%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 2.6Resales as a Share of Total Condo Stock


2006-2016 Average = 7.7%


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• Quarterly resale condo apartment sales growth accelerated to a

26% annual pace in Q4-2016, recording double-digit increases for the 15th consecutive quarter. Sales growth for resale condos has been stable in recent years after experiencing notable volatility during the period preceding and following the Great Recession between 2007 and 2013. Over the past 10 years, quarterly resale activity averaged an annual rate of growth of 18%.

• Relative to supply levels, demand for resale condo apartments has

been exceptionally strong. The ratio of sales-to-listings increased to 80% in Q4-2016 — an all-time high and substantially above the upper threshold of a balanced market (50%). Resale condos have been in a seller’s market during the past seven consecutive quarters. Over the past 10 years, the quarterly ratio of sales-to-listings averaged 61%, falling below 35% (the lower boundary of a balanced market) for only a brief period in early 2009.

26%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Figure 2.7Quarterly Resale Condo Apartment Sales: Year-over-Year Growth



80%

50%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Figure 2.8Resale Condo Apartment Quarterly Sales-to-Listings Ratio


Sales-to-Listings RatioBalanced Market Boundaries


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Rental Apartments

• A total of 26,832 condo apartments were leased through the MLS

system during 2016, down 1.4% from a high of 27,217 units in 2015 — the first annual decline recorded by Urbanation since reporting began in 2010. As a share of the total condo stock, lease activity fell from 26% in 2015 to 22% in 2016, which was the lowest level of rental turnover since 2011. Even with the moderation in lease activity last year, there was a higher volume of units rented than resold through MLS.

• Quarterly condo apartment lease activity has trended down over

the past four quarters, with Q4-16 volumes declining 1% year-over-year. Lease activity began to recover in the latest quarter after experiencing annual declines of 9% and 10% during the previous two quarters. Over the past five years, quarterly condo apartment lease activity has increased by an average annual rate of 18% — the same level of growth as the long-term resale average.

27,217 26,832

26%

22%

20%

22%

24%

26%

28%

30%

0

5,000

10,000

15,000

20,000

25,000

30,000

2011 2012 2013 2014 2015 2016

Figure 2.9Annual MLS Condo Apartment Lease Transactions


Leases Transacted through MLS

As % of Total Condo Stock

Source: Urbanation Inc., TREB

-1.0%

-20%

-10%

0%

10%

20%

30%

40%

50%

Figure 2.10Quarterly MLS Condo Apartment Lease Activity: Year-over-Year Growth


Y/Y Change4 per. Mov. Avg. (Y/Y Change)


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• Demand for condo rentals reached an all-time high in 2016 when measured against supply levels. The ratio of leases-to-listings hit a record 77% in Q4-16, rising from an already lofty 74% in Q4-15 and stabilized levels from 2011 to 2014 averaging 66%. The average time on market for units leased fell to a low of 13 days, down a full week from Q4-2015 (20 days).

• Purpose rental apartment absorptions of newly completed buildings reached 1,343 units in the 12 months to Q4-2016, edging up from the previous quarter (1,234 units) and more than doubling the level from a year earlier (651 units). Lease-up volumes for recently finished purpose-built rentals have moved higher on account of both strong demand and increasing completions. Of the 1,719 units reaching occupancy in the past 12 months, 78% were absorbed, maintaining a consistent level since Q2-2015.

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50%

55%

60%

65%

70%

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80%

Q4-11 Q4-12 Q4-13 Q4-14 Q4-15 Q4-16

Figure 2.11Ratio of Leases-to-Listings and Average Days on Market


Avg. Days on Market

Leases-to-Listings Ratio (%)


1,013845

651554 609

1,2341,343

78.1%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%

0200400600800

1,0001,2001,4001,6001,8002,000

Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016

Figure 2.12Absorption of Purpose-built Rentals Completed in Past 12 monthsGreater Toronto Area, Q2-2015 to Q4-2016, 12-month rolling totals

Absorption Volume Absorption Rate (%)


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3.0 SUPPLY INDICATORS New Condominium Apartments • The volume of new condominium apartments launched for pre-

sale in the GTA declined by 6% in 2016 to 18,466 units, its lowest level since 2013 but in line with the 10-year average of 18,491 units. Since reaching a record high of 28,204 units in 2011, new launch activity has remained below 20,000 units in each of the past five years. The latest trends for new launches contrasts the growth recorded in new condo apartment sales in 2016.

• The failure of new condo apartment supply to keep pace with demand resulted in a 47% annual plunge in remaining inventory (across all stages of development) to 9,923 units in Q4-2016, dropping to a 15-year low. Unsold inventory averaged approximately 19,500 units from 2012 to 2015, with a 10-year average of 16,218 units.

28,204

18,466

0

5,000

10,000

15,000

20,000

25,000

30,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 3.1Annual New Condo Apartment Pre-sale Launches


2006-2016 Average = 18,491


21,332

9,923

02,5005,0007,500

10,00012,50015,00017,50020,00022,50025,000

Figure 3.2Unsold New Condo Apartment Inventory



2006-2016 Average = 16,218

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• Measured against the level of sales recorded in 2016, there was a record-low 4.4 months of supply for new condominiums in Q4-2016, falling from 11.1 months a year earlier in Q4-2015. The average level of inventory over the past 10 years was 11.7 months (median of 10.7 months), which is within the 10-12 months of supply range representative of a balanced market. The highest levels of inventory over the past decade were recorded during brief periods in early 2009 at 22 months and in late 2013 at 21 months.

• Unsold inventory declined in 2016 consistently across all stages of development, with remaining units in pre-construction projects down 49% annually to 5,313 units (56% share of inventory), unsold units under construction falling 45% to 3,847 units (41% share) and completed projects in occupancy seeing unsold inventory drop 50% to only 291 units.

4.4

0

5

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15

20

25

Figure 3.3New Condo Apartment Inventory Months of Supply



2006-2016 Average = 11.7

10,348

7,003

578

5,313

3,847

2910

2,000

4,000

6,000

8,000

10,000

12,000

Pre-construction Under Construction Occupying

Figure 3.4Unsold Inventory by Construction Status

Greater Toronto Area: Year-end 2015 and 2016

Unsold Units: Dec 2015

Unsold Units: Dec 2016


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• The total inventory of units under construction has remained fairly consistent since 2013, averaging 50,630 units during the four-year period as construction starts and completions have largely offset one another. However, under construction counts did increase to a 10-quarter high of 52,328 units in Q4-2016, which approached the record set in Q2-2014 at 52,905 units.

• While the quick absorption of pre-construction units helped drive construction starts higher in 2016, another important factor behind the increase in under construction inventory at the end of the year was the decline in completions to a three-year low. Condo apartment completions fell by 9% in 2016 to 18,017 units, declining for the second year in a row after reaching a high of 21,133 completions in 2014.

• Looking ahead, completions are projected to rebound in 2017 to 19,730 units, based on scheduled occupancy dates for projects underway. Completions could reach record highs of 24,082 units in 2018 and 22,809 units in 2019, before dropping to 16,609 units by 2020. Given the past relationship between scheduled occupancies and realized completions, annual deliveries are likely to experience a more even distribution in the coming years as projects inevitably face construction delays. Nonetheless, supply growth from condo completions could rise to historically high levels at some point within the next four years.

52,328

27,900

0

10,000

20,000

30,000

40,000

50,000

60,000

Figure 3.5New Apartments in Development by Construction Status


Under Construction Condo Pre-construction Condo


12,938

16,416

21,13319,702

18,01719,730

24,082 22,809

16,609

0

5,000

10,000

15,000

20,000

25,000

30,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 3.6Annual Apartment Completions



Scheduled occupancies

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Resale Condominium Apartments

• Condominium apartment registrations (i.e. final closings of new buildings) totalled 17,705 units in the 12-months to Q4-2016, rising from a three-year low of 16,192 units in the 12 months to Q3-2016 but remaining well below the level from a year earlier in Q4-2015 (22,472 units). Condo apartment registrations have recently converged closer to their 10-year average level of 15,088 units after reaching as high as 24,369 units in Q2-2014.

• Among projects registered during the previous two-year period, a four-quarter average of 4.6% of units were listed for resale as of Q4-2016, edging down from 4.7% in both Q3-2016 and Q4-2015. Listings within recently registered buildings have been trending down over the past 4.5 years after topping out at 8% of new units in Q2-2012.

• Listings in new buildings have generally been trending in the same

direction as the entire condo apartment resale market, which saw four-quarter average listings decline to 3.2% of total units in Q4-2016 — its lowest level of the past 10 years

24,369

17,705

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5,000

10,000

15,000

20,000

25,000

30,000

Figure 3.7Condo Apartment New Registrations

Greater Toronto Area: Q1-2006 to Q4-2016, 12-month totals


2006-2016 Average = 15,088

4.6%

3.2%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Figure 3.8Total Quarterly Condo Resale Listings as a Share of the Stock

Greater Toronto Area: Q1-2008 to Q4-2016, 4-quarter moving average

Projects Registered withinPrevious Two Year PeriodTotal Universe


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• On a total volume basis, resale listings declined by 14% year-over-year in Q4-2016, moving in the opposite of direction of sales. Resale listings fell on an annual basis for the fourth consecutive quarter, which each decline successively stronger. Over the past 10 years, quarterly total listings grew by an average of 4.7% year-over-year, versus an 18% average rate of growth for sales.

• The lack of resale supply growth and record amount of demand in

2016 pushed the level of active resale condo apartment listings at year-end down by 58% from a year earlier to 1,135 units — the lowest level of year-end listings in the past 10 years. The inventory of resale condo apartment supply dropped to a record low 0.5 months, falling substantially below the 10-year Q4 average of 1.8 months and a balanced market level of roughly 2.5 months.

-13.7%

-0.4-0.3-0.2-0.1

00.10.20.30.40.50.6

Figure 3.9Quarterly Resale Condo Apartment Listings: Year-over-Year Growth



0.5

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Q4-06 Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Q4-15 Q4-16

Figure 3.10Resale Condo Active Listings at Quarter End and Months of Supply


Months of Supply (R)

Active Listings (L)


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Rental Apartments

• Within condominium apartment buildings registered during the previous 12-month period, 25.6% of units were listed for rent in Q4-2016 on MLS, moderating from 29.5% in Q3-2016 and below the high of 38.6% reached in Q1-2016. As a share of new registrations, condo rental listings grew above underlying trend levels from Q2-2015 to Q1-2016, falling below trend during the last three quarters. The latest quarterly trend level for rental listings on MLS in newly registered buildings was estimated at approximately 32%.

• Total condo apartment rental listings volumes were down 5.5% year-over-year in Q4-2016, the third consecutive annual decline as a result of the slowdown in registrations and reduced rental turnover in new buildings. The rate of decline for condo rental listings improved in the latest quarter from the 13% and 15% declines recorded during the previous two quarters. Over the past five years, quarterly condo rental listings grew by an average annual rate of 12%, versus growth in condo lease volume of 16%.

38.6%

25.6%

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%

Q1-

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Figure 3.11Total Quarterly Condo Rental Listings as a Share of Total Units


New Registrations during the quarter


trendline

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0.1

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Figure 3.12Quarterly MLS Condo Apartment Total Listings: Year-over-Year Growth


Y/Y Change4 per. Mov. Avg. (Y/Y Change)


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• Active condo apartment rental listings at year-end 2016 fell 13% annually to 1,558 units, equal to 0.7 months of supply. Condo rental apartment supply has been trending down over the past two years, peaking at nearly 2,000 active listings and 1.1 months of supply at year-end 2014.

• Urbanation’s survey of purpose-built rental apartment buildings completed since 2005 has revealed low rates of vacancy and declining levels of availability. In Q4-2016, vacancy rates in these newer rental buildings averaged 0.6% — below the average for the entire purpose-built market reported by CMHC at 1.3%. The availability rate (share of units vacant or occupied and listed for rent) was 1.6%, steadily declining from 2.1% a year earlier in Q4-2015.

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Q4-11 Q4-12 Q4-13 Q4-14 Q4-15 Q4-16

Figure 3.13Rental Condo Active Listinsg at Quarter End and Months of Supply


Months of Supply (R)

Active Listings (L)


2.2%

1.6%

2.1%1.9% 1.9%

1.7% 1.6%

0.6% 0.6%

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1.0%

1.5%

2.0%

2.5%

3.0%

Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Q4-2016

Figure 3.14Availability and Vacancy Rates for Purpose-built Projects Built Since 2005


Availability Rate

Vacancy Rate

Source: Urbanation

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• After reaching a decade high of 6,170 purpose-built units under

construction in Q4-2015, the level declined to 5,133 units in Q4-2016. Despite the decline, purpose-built construction activity remained 71% higher than the 10-year average level of 3,005 units.

• An estimated 2,581 purpose-built rentals are scheduled for

completion in 2017, increasing from 1,719 units in 2016 and a longer-term average of approximately 1,000 units per year. Completions for purpose-built units are projected to moderate to 1,995 units in 2018.

• The total number of purpose-built rentals proposed for development reached 27,812 units, soaring from 10,513 units in the proposed stage a year earlier in Q4-2015.

0

1,000

2,000

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Q4-06 Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Q4-15 Q4-16

Figure 3.15Purpose-built Rental Apartments Under Construction



27,812

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Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16

Figure 3.17Inventory of Proposed Purpose-built Rentals



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4.0 PRICE / RENT TRENDS New Condominium Apartments • Despite the strong level of sales and sharp drop in inventory, new

condo apartment price growth remained steady at 3% in Q4-2016, reaching an average index level of $598 psf for all sold units in development. Within new projects launched in the previous 12 month period, sold index prices increased by 2% annually to $615 psf. Part of the reason for the subdued growth in new condo apartment prices has been due to a shift in development activity to lower-priced markets within the GTA. Over the past 10 years, new condo apartment sold index prices have grown by an annual average of 6%.

• As a sign that price pressures are building for new condominiums,

average asking prices for unsold units increased by 7% year-over-year in Q4-2016 to reach $646 psf. The rate of growth was the fastest recorded in over five years, a period over which asking prices grew by an annual average of 2%.

3%

$615

$598

0%2%4%6%8%10%12%14%16%18%20%

$300

$350

$400

$450

$500

$550

$600

$650

Figure 4.1New Condo Apartment Pricing


Annual % Change in Sold Index PricesNew Launch (Past 12 mths) Sold Index Prices PSFAll Units Sold Index Prices PSF


7%

$646

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$550

$600

$650

$700

Figure 4.2New Condo Apartment Pricing for Usold Units


Y/Y % ChangeAvg. Unsold Price Index


PRIC

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Resale Condominium Apartments • Resale condominium apartment prices have quickly responded to

the changing market conditions, rising by 16% year-over-year in Q4-2016 to reach an average of $533 psf. Resale price growth has accelerated from an annual pace of 6.7% in Q4-2015 and a five-year average of 5.2%. The 10-year average rate of growth for resale prices was 6.3%, recording moderate price declines in only three quarters during the period.

• Despite the increased rate of growth in 2016, condo apartment

prices have gained an increasing affordability advantage in the GTA market. In the 10 year period to 2016, average resale prices grew by 8.4% annually for detached houses and 7.4% annually for semis/rows/towns. The gap in growth widened substantially in 2016 as single-detached prices grew 21%, elevating the average value for the year to $974,698 — a level twice as high as average resale condo apartment prices of $416,252, which compares to a gap of roughly $200,000 recorded 10 years ago. The gap between condo apartment prices and semis/rows/town increased to $182,665 from about $55,000 in 2006.

15.9%

$533

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

$200

$250

$300

$350

$400

$450

$500

$550

Figure 4.3Average Resale Condo Apartment Price PSF and Annual Change


Y/Y Growth (%)Avg. Resale Price PSF


$439,858

$974,698

$294,709

$598,917

$239,660

$416,252

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 4.4Average Resale Prices by Housing Type


Detached

Semi/Row/Town

Condo Apt

Source: TREB, Urbanation Inc.

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Rental Apartments • Tightened rental market conditions also led to faster growth in

condo rents, which increased by close to 12% year-over-year in Q4-2016, rising from a 4.6% annual pace in Q4-2015. Condo apartment rents reached a record $2.78 psf, increasing by a cumulative 26% over the past five years (averaging 4% growth per year). Excluding the impact of newly registered buildings, same sample rents grew by 7.3% year-over-year in Q4-2016.

• Holding the unit size constant at 725 sf, condo apartment rents averaged $1,929 over the past four quarters, which was a marginal discount ($63) relative to the ownership carrying cost associated with purchasing the average priced resale unit of the same size ($1,991). The gap between the cost of buying and the cost of renting has maintained a thin spread over the past three years as prices and rents have trended in the same direction and interest rates have continued to move lower. Prior to 2013, renting held a relatively wide affordability advantage, which partly spurred the growth in rental demand witnessed in more recent years.

11.6%

$2.78

0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%18.0%20.0%

$2.00$2.10$2.20

$2.30$2.40$2.50$2.60$2.70$2.80$2.90

Q1-1

1Q2

-11

Q3-1

1Q4

-11

Q1-1

2Q2

-12

Q3-1

2Q4

-12

Q1-1

3Q2

-13

Q3-1

3Q4

-13

Q1-1

4Q2

-14

Q3-1

4Q4

-14

Q1-1

5Q2

-15

Q3-1

5Q4

-15

Q1-1

6Q2

-16

Q3-1

6Q4

-16

Figure 4.5Average Condo Apartment Rents PSF and Annual Change


Y/Y % Change

Avg. Rent PSF


$1,991$1,929

$1,500

$1,600

$1,700

$1,800

$1,900

$2,000

$2,100

Q1-1

1Q2

-11

Q3-1

1Q4

-11

Q1-1

2Q2

-12

Q3-1

2Q4

-12

Q1-1

3Q2

-13

Q3-1

3Q4

-13

Q1-1

4Q2

-14

Q3-1

4Q4

-14

Q1-1

5Q2

-15

Q3-1

5Q4

-15

Q1-1

6Q2

-16

Q3-1

6Q4

-16

Figure 4.6Average Condo Ownership Cost versus Rent


Average Condo Ownership Cost*

Average Condo Rent

*Based on 725 sf unit, av erage condo resale prices psf , 20% down payment, f ive-year discounted mortgage rates, 25-year amortization, includes condo fees and property taxes

Source: Urbanation, TREB, Bank of Canada

4-qtr. moving averages:

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q4-16 gta apartment market overview - urbanation · 2017-07-06 · gta apartment market overview...

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