Toronto Condo Rents Drop by 7% in Six Months, Largest Decline in 15 Years

A recent report from Urbanation, a real estate research firm, reveals a significant drop in condo rents in the Greater Toronto Hamilton Area (GTHA). This decline of 7.4% over six months marks the largest decrease in 15 years, excluding the pandemic period.

The surplus of condominium units on the market has provided renters in the GTHA with some relief, although this trend may not be sustained. Despite the decline, average condo rents in the area saw a year-over-year increase of 1.6% in the first quarter of 2024, a notable slowdown compared to the substantial 13.3% annual increase recorded a year earlier.

Urbanation President Shaun Hildebrand notes that while the market remains expensive, renters have experienced temporary relief thanks to an influx of supply from condo investors. The impact of newly completed condo units on the rental market has been significant, with over 23,000 new units registered in the past four quarters—a 21% increase from the previous year.

Additionally, the construction of purpose-built rental units reached a multi-decade high in the first quarter of 2024, largely due to government incentives. However, future construction projects face challenges such as high interest rates and increased costs, potentially limiting new supply in the coming years.

Hildebrand predicts a slowdown in condo rental supply for the remainder of the year, with fewer new builds expected due to reduced developer investment. Despite this, demand for rental properties remains strong, suggesting that rents may stabilize rather than continue to decline.

Looking ahead, Hildebrand emphasizes the discrepancy between advertised occupancy dates for new condo units and the actual delivery, suggesting that rents will likely continue to rise as construction fails to meet demand.

In light of market uncertainties, including delays in construction projects and reduced confidence among developers, Urbanation reports a decrease in new project launches in the first quarter of 2024, with only four projects introduced to the market.