Toronto condo rental prices soar, key vacancy rate drops as pandemic recovery picks up speed.
Toronto area tenants are once again facing a squeezed rental market similar to what they experienced before the pandemic, according to a new report.
Market research firm Urbanation says the vacancy rate for newer purpose-built apartments slid below 2% while condo rental prices soared 15.8% annually in the first quarter of this year. That rent growth, in addition to a 3.1% quarter-over-quarter increase, was the fastest climb in condo rents that Urbanation has seen since it began tracking lease rates in 2010.
After stalling during the pandemic, the rental sector is poised for growth with skyrocketing home ownership costs, rising immigration and interest rates fuelling the demand for apartments, said Urbanation president Shaun Hildebrand. Those are in addition to climbing inflation and near-record low unemployment — factors that typically drive down vacancies and boost rents.
“Condo rents usually rise very minimally, if at all, between the fourth quarter and the first quarter,” said Hildebrand. Urbanation’s first-quarter report this year showed that GTA condo rents are at the highest level since the fourth quarter of 2019. A 710 sq. ft. unit is demanding an average rent of $2,396.
Rising rents were led by the City of Toronto in the last year, which saw a 16.8% annual increase. But the cost of those units still remains 0.9% below where they were two years ago. Overall, rent increases have been highly concentrated in the 905 area of the GTA since the start of the pandemic, where rents were up 7.7% over the past two years.
Urbanation reported that there were 118,203 purpose-built apartments under construction or in the planning stages in the first quarter of this year. The 7,684 purpose-built rentals scheduled to reach completion in 2022 represents growth of 122% over the 3,461 units delivered in 2021 and is 220% higher than the five-year annual average (2,404 units).
As governments look at ways to boost the housing supply, they need to pay particular attention to rentals, he said.
“They take a long time to go through the planning process and, really, let’s find a way to get these units built, because that will eventually — hopefully — bring us into a more balanced market where we don’t have to see such aggressive rises in rent.”
