Greater Toronto Condo Rents Drop for the First Time Since 2021: What It Means for Property Investors

The Greater Toronto Hamilton Area (GTHA) condo market has experienced its first annual drop in rent prices since 2021, a noteworthy shift driven by a surge in condo completions. According to Urbanation Inc., condo rents in the GTHA declined by 1.2% year-over-year in Q2-2024, ending a three-year period of consistent rent increases. This softening in rents, highlighted by Urbanation President Shaun Hildebrand, is attributed to a temporary spike in condo completions, which is expected to taper off due to a significant decrease in new condo sales and construction activity.

Studios saw the steepest decline, with rents falling by 3.9%, averaging $2,047 for a 395 square foot unit. Rents for one-bedroom units decreased by 1.8%, while two-bedroom and three-bedroom units saw declines of 0.9% and 0.6%, respectively. Despite this decline, the condo market remains robust, with lease transactions reaching a record high of 16,169 units in Q2-2024, a 29% increase from the previous year. This was accompanied by a 47% increase in condo listings, driven by an 82% rise in newly registered condos.

The City of Toronto saw a 2.1% decrease in rents, averaging $2,765 for a 674 square foot unit, while rents in the 905 region rose by 2.0% to $2,610 for a 719 square foot unit. Vacancy rates for purpose-built rentals in the GTHA hit an 11-quarter high of 2.7%, with Toronto at 2.8% and the 905 region at 2.6%. Rent growth for these rentals slowed to a 2.2% annual pace, averaging $2,953 for 723 square feet.

Hildebrand noted that although there have been recent improvements in rental construction, the overall level of starts remains insufficient to meet long-term demand. This temporary cooling of the market highlights ongoing challenges in housing supply, which will continue to impact the GTHA rental landscape.

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Sarah Colucci, Mortgage Agent Level 2
Sherwood Mortgage Group, Broker 12176 
Direct: (647) 773-4849
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