Condo rental prices experience largest decrease in 15 years

The Greater Toronto and Hamilton Area (GTHA) condo rental market is experiencing a significant downturn, with the largest six-month decrease in rent prices in the past 15 years. According to real estate consulting firm Urbanation, the GTHA reached a peak rental rate of $4.20 per square foot in the third quarter of 2023, equivalent to $2,929 for a 698-square-foot condo. However, the market has since seen a 7.4 per cent decline in average condo rents.

“Renters waiting for some reprieve in the market have found it thanks to a temporary supply infusion from condo investors. This isn’t expected to last long, and rents should continue rising as construction falls short of demand,” said Urbanation president Shaun Hildebrand in Wednesday’s quarterly report.

Despite this decrease, year-over-year figures for the first quarter of 2024 show a 1.6 per cent increase in average condo rents. However, this growth is considerably slower compared to the 13.3 per cent annual increase recorded in the same quarter of 2023, representing the slowest pace of rent growth in nine years.

One major factor contributing to the slowdown in price growth is the influx of newly completed condos into the rental market. Urbanation reported that a total of 23,095 new condos were registered in the past four quarters, a 21 per cent increase over the same period ending Q1-2023.

The data also reveals a contrast in trends between condo rentals and purpose-built rental buildings. Condo buildings now account for a record 24 per cent of all condos listed for rent in the first quarter of 2024, with a 37 per cent year-over-year increase in condo rental listings. In contrast, rents in purpose-built rental buildings have risen by 2.0 per cent quarterly and 4.5 per cent annually, averaging $4.14 per square foot.