Rents in the Greater Toronto Hamilton Area (GTHA) experienced “softening” last quarter for the first time in three years, but price drops are likely to be short lived, according to a new report.
Data from Urbanation shows an average year-over-year drop of 1.2 per cent in condo rents in Q2, marking the first annual decline over the same period since 2021.
But, Shaun Hildebrand, president of Urbanation, says slightly lower rents are due to a temporary spike in condo completions that are projected to drop off following a sharp reduction in condo sales and construction.
Listings surged last quarter due to an 82 per cent rise in newly available condos from a year ago to 8,380 units, though demand is expected to outpace construction in the near future.
“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,” Hildebrand said in a Tuesday press release.
Demand was strong throughout Q2 with a record high of 16,169 leases signed, an increase of 29 per cent annually, which is 60 per cent above the 10-year average, according to the report; while the mean cost of rent for condos fell to $3.97 per square foot or $2,723 for 686 square feet Urbanation reported.
Studio apartment prices dropped by 3.9 per cent in Q2 compared to a year ago, for an average cost of $5.18 per square foot, or $2,047 for 395 square feet; this was the largest decline of rental properties surveyed.
Similarly, one-bedroom rents declined 1.8 per cent from a year ago to $4.14 per square foot, or $2,450 for 591 square feet, while two-bedroom rents were down 0.9 per cent year-over-year to an average of $3.54 per square foot, or $3,143 for 889 square feet.
Three-bedroom rents saw the least movement, decreasing 0.6 per cent from a year ago to an average of $3.83 per square foot, or $3,988 for 1,041 square feet.
Meanwhile, vacancy rates in purpose-built rentals completed in the GTHA since 2000 hit an 11-quarter high in Q2, with 2.8 per cent lying dormant in Toronto and 2.6 per cent in the 905 region,, the report says.
Rents on these properties reached an average of $4.08 per square foot, or $2,953 for 723 square feet.
Construction on new projects saw a 13-per cent increase year-over-year, with 1,558 unit starts in Q2.
