The vacancy rate for apartment buildings in Toronto has hit a 50-year high.
According to an Urbanation survey of purpose-built rental apartments built since 2005 found the vacancy rate was 5.7 per cent in the fourth quarter of 2020.
During the same period a year prior, the vacancy rate was 1.1 per cent.
The survey examined historical data from the Canadian Mortgage and Housing Corporation data that dates back to 1971.
The overall vacancy rate in the Greater Toronto Area is at 4.6 per cent, up from one per cent in the fourth quarter of 2019.
The average price of rent has also declined for purpose-built units that became available in late 2020, a 10 per cent year-over-year drop to $2,337 compared to $2,597 in 2019.
Average GTA rent dropped eight per cent from $2,489 to $2,289. That decline is in addition to incentives landlords are using to attract new tenants, namely two months’ free rent. Urbanation found the majority of rental buildings were still offering that deal in the fourth quarter.
Vacancy rates increased the least and average rent decreased the least in the 905 region where rates were two per cent in Q4 of 2020 compared with 0.8 per cent in 2019. Meanwhile, rent only dropped 2.2 per cent to $2,139 in the 905 year-over-year.
Urbanation attributes the trend to a limited amount of rental stock in the suburbs outside the city, as well as increased demand to people leaving Toronto for other areas.
Average condo rents drop over 14 per cent
Meanwhile, average rent for condo apartments in the GTA declined 14.1 per cent year-over-year to $2,076 – the lowest level since Q2 of 2017.
That drop comes despite a record lease transaction volume in the GTA, which increased 25 per cent in 2020 to 38,366 units.
Shaun Hildebrand, president of Urbanation, said in a statement that the GTA rental market faced its toughest challenges to date due to the pandemic.
“While rents have a long way to go before returning to their peak and supply will continue to be a headwind in the near-term, some improvement can be expected in 2021 as vaccinations eventually lead to higher immigration and at least a partial return to the office for downtown workers and in-class learning for post-secondary students,” he said.
Seven new purpose-built rental apartment buildings were completed in the GTA during 2020, equalling 1,699 additional units.
By the end of the year, the new buildings were occupied at an average of 44 per cent.
In 2019, 11 new buildings of 3,563 units were completed and were 70 per cent occupied by the end of the year.
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