Greater Toronto condo rents see first annual drop since 2021

A surge in condo completions has led to the first annual decline in GTHA rents since 2021, signalling a temporary market shift.

For the first time in three years, the Greater Toronto Hamilton Area (GTHA) has seen a decrease in condo rent prices.

According to Urbanation Inc., condo rents in the GTHA fell by 1.2% year-over-year in the second quarter of 2024. This marks the first annual decline since the second quarter of 2021, when the market was still reeling from the impacts of COVID-19.

“Rents are experiencing some softening mainly due to a temporary spike in condo completions,” said Shaun Hildebrand, President of Urbanation. He added that this spike will eventually subside given the sharp drop in new condo sales and construction activity.

Studios saw the most significant decline, with rents dropping by 3.9%, averaging $2,047 for a 395 square foot unit. One-bedroom rents decreased by 1.8%, while two-bedroom rents were down by 0.9%. The three-bedroom units experienced the smallest decline, with a decrease of just 0.6%.

Average-GTA-condo-rents — *Source: Urbanation*

Despite the overall rent decline, the market remains active. The number of condo lease transactions reached a record high of 16,169 units in Q2-2024, a 29% increase from the previous year. However, this was accompanied by a 47% increase in the number of condos listed for rent, totalling 21,695 units. This surge in listings is partly due to an 82% increase in newly registered condos.

In the City of Toronto, rents fell by 2.1% to an average of $2,765 for a 674 square foot unit. Meanwhile, rents in the 905 region of the GTHA rose 2.0% to $2,610 for a 719 square foot unit.

Vacancy rates for purpose-built rentals in the GTHA reached an 11-quarter high of 2.7%, up from 2.6% in Q1-2024 and 2.2% in Q2-2023. In Toronto, the vacancy rate was 2.8%, while the 905 region saw a rate of 2.6%. Rent growth for purpose-built rentals slowed to a 2.2% annual pace, with rents averaging $2,953 for 723 square feet.

Hildebrand emphasized that while recent improvements in rental construction have been noted, the overall level of starts remains too low to meet long-term demand. This indicates that although the market is currently experiencing a temporary cooling, long-term challenges in housing supply persist.

Purpose-built rental construction starts — Source; Urbanation

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Last modified: July 31, 2024

Steve Huebl

Steve Huebl is a graduate of Ryerson University's School of Journalism and has been with Canadian Mortgage Trends and reporting on the mortgage industry since 2009. His past work experience includes The Toronto Star, The Calgary Herald, the Sarnia Observer and Canadian Economic Press. Born and raised in Toronto, he now calls Montreal home.