GTHA Condo Rents Down 7% in Past 6 Months

TORONTO – May 01, 2024:  Urbanation Inc., the leading source of data and analysis on the GTHA condominium and rental apartment markets since 1981, released its Q1-2024 rental market results today.

• Average condo rents declined 7% from the high in Q3-2023 to $2,732 ($3.89 per sf) in Q1-2024
• Annual condo rent growth slowed to 1.6% as condo completions reached a record high
• Purpose-built rental vacancy edged up to 2.6%. Vacancy averaged 3.5% in non-rent controlled buildings compared to 1.7% in rent-controlled buildings completed before 2019
• Rental construction starts over past 12 months were up 174% from 2022 lows

After reaching a record high of $4.20 psf ($2,929 for 698 sf) in Q3-2023, average condo rents in the GTHA have declined 7.4%, the largest six-month decrease recorded during the past 15 years of data tracking outside of the pandemic period in late 2020/early 2021.

Despite this decline, average condo rents in the Greater Toronto Hamilton Area (GTHA) increased 1.6% year-over-year in Q1-2024 to $3.89 per square foot ($2,732 for 702 sf). Outside of the rent declines experienced during COVID-19, this represented the slowest annual pace of rent growth in nine years and a substantial deceleration compared to the 13.3% annual increase recorded a year ago in Q1-2023. 

Supply from newly completed condos made a significant impact on the rental market. Over the past four quarters, a total of 23,095 new condos were registered, a 21% increase over the same period ending Q1-2023 (19,028) and the third highest four-quarter total ever recorded. Additionally, a record high 12,132 new condo units began occupancy in Q1 alone, adding further ‘shadow’ rental supply to the market. 

Buildings registered in the past four quarters represented a record 24% share of all condos listed for rent in Q1-2024. Overall, the 37% year-over-year increase in condo rental listings more than doubled the 15% increase in leases signed during Q1-2024. This pushed active condo rental listings at quarter-end up to 5,078 units — a 55% quarter-over-quarter increase and more than double the level from Q1-2023 (2,516).

For purpose-built rental buildings completed since 2003, rents increased 2.0% quarter-over-quarter and 4.5% year-over-year to an average of $4.14 psf ($2,933 for 723 sf). The continued growth in rents for purpose-built rentals came as new supply slowed. After reaching a multi-decade high of 5,779 units for the year ending 2023, purpose-built rental completions fell to a six-quarter low of 783 units in Q1.

The 2.6% vacancy rate for purpose-built rentals in Q1-2024 represented a slight increase from Q4-2023 (2.5%) and a modest increase compared to a year ago in Q1-2023 (2.0%), but still representative of an undersupplied market. Vacancy rates were highest in non-rent controlled buildings completed since 2019 at an average of 3.5%, compared to pre-2019 rent-controlled buildings averaging vacancy of only 1.7%.

Since the government announced the removal of GST on new purpose-built rentals in November 2023, progress has been made towards improving construction activity. Over the last four quarters, a total of 5,976 purpose-built rental units started construction, a 174% increase off the low of 2,182 starts in the four-quarter period ending Q3-2022. However, the latest annual total for starts remained below the recent high of 7,540 starts recorded in 2021, and starts were down 21% year-over-year in Q1-2024 to 1,329 units.  The total inventory of purpose-built rentals under construction in the GTHA reached a multi-decade high of 22,064 units in Q1-2024.

“While the market remains expensive with rents 15% higher than two years ago, 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.”

 Shaun Hildebrand, President of Urbanation.