Rent prices for condos in Toronto dropped for the first time in three years, according to recent industry numbers.
It is the first decline since the second quarter of 2021, the report said.
“Rents are experiencing some softening mainly due to a temporary spike in condo completions, which will subside following the steep drop off in new condo sales and construction activity,” said Shaun Hildebrand, president of Urbanation, in the report. “While some recent improvement to rental construction has been occurring, the level of starts for rentals remains much too low to keep pace with demand over the longer-term.”
Condo units that saw the largest decline were studios, which dropped 3.9 percent, according to the report. Rents for studio units are $5.18 per square foot, which would be $2,047 for 395 square feet. One-bedroom rents fell 1.8 percent from a year ago to about $4.14 per square foot ($2,450 for 591 square feet) and two-bedroom units saw a 0.9 percent drop to $3.54 per square foot ($3,143 for 889 square feet).
Rents for three-bedroom units dropped 0.6 percent from 2023 prices, Urbanation says, amounting to $3,988 per month for a 1,041-square-foot condo.
Toronto saw condo rents drop by 2.1 percent annually with an average of $4.10 per square foot, or $2,765 for a 674-square-foot home.
Rental costs in Hamilton saw a 2 percent increase over 2023 rates to $3.63 per square foot or $2,610 for 719 square feet.
The number of condo lease transactions in the Toronto and Hamilton areas saw a record high in the second quarter of 2024, Urbanation reports, increasing 29 percent year-over-year and 60 percent over the 10-year average. There were 16,169 lease transactions between April and June of 2024.
The number of condos listed for rent during that time also increased by 47 percent year-over-year to 21,695 units.
The number of condos being built has also increased by 43 percent from 2023. A total of 1,558 purpose-built rentals started construction between April and June this year.
In total, construction starts are up 13 percent year-over-year and 190 percent from the low in 2022. However, starts are still 32 percent lower than in the first part of 2021, according to the report.
Urbanation credits this to the number of newly registered condos, which rose 82 percent from last year, to 8,380 units.
The company has been researching and tracking the condo market in the GTHA since 1981.