Record Condo Completions Bring Down Rents in Toronto

TORONTO – October 30, 2024:  Urbanation Inc., the leading source of data and analysis on the Greater Toronto Hamilton Area (GTHA) condominium and rental apartment markets since 1981, released its Q3-2024 rental market results today.

Average condo rents in the GTHA for leases signed during Q3-2024 decreased 3.8% year-over-year to $4.04 per square foot. The average monthly cost of a condo rental leased in Q3 fell 5.7% from a year ago to $2,762, with the average unit size decreasing to a record low 684 square feet. Despite the recent decline, average per square foot condo rents remained 4.7% higher than two years ago and have increased 17.4% over the past five years.

Condo rents experienced downward pressure due to a record high number of new condo deliveries. The number of condos that were registered (i.e. were completed and reached final closing) so far this year has totaled 23,473 units, a 132% increase over the same period last year (10,098 units) and a 67% increase over the 10-year average (14,087 units) for the same time period. 

The number of condos listed for rent during the third quarter totaled 22,939 units, increasing 52% year-over-year. While the number of condo lease transactions in Q3 reached a record high at 17,327 units, activity grew at a slower pace than listings with a 39% annual increase. As a result, the ratio of leases-to-listings declined from 83% in Q3-2023 to 76% in Q3-2024, which was the lowest demand/supply ratio for a Q3 period of the past 10 years outside of COVID-19.

In the City of Toronto, where most of the new condo supply was delivered, average condo rents declined 4.8% annually to $4.18 psf ($2,805 for 671 sf). Average rents in the 905 region of the GTHA increased 0.5% annually to a record-high average of $3.69 psf ($2,652 for 718 sf).

By unit type, studios experience the largest year-over-year drop of 7.3% in average condo rents to $5.36 psf ($2,102 for 392 sf). One-bedroom condo rents decreased 3.9% annually to an average of $4.19 psf ($2,494 for 595 sf) and two-bedroom rents declined 3.7% annually to an average of $3.80 psf ($3,174 for 835 sf). Three-bedroom rents declined the least, down 0.8% annually to $3.69 psf ($4,023 for 1,089 sf).

Similar trends for rents within new purpose-built rentals completed in the GTHA since 2000 were seen in Q3, with average rents dipping 2.2% annually to $4.09 psf ($2,959 for 723 sf). City of Toronto new purpose-built rents decreased 2.9% annually to an average of $4.52 psf ($3,110 for 689 sf), while 905 rents in new purpose-built rentals increased 0.6% annually to an average of $3.34 psf ($2,647 for 792 sf).  

The vacancy rate in new purpose-built rentals in the GTHA was 2.7% in Q3-2024, unchanged from Q2-2024 but up from 1.8% a year ago in Q3-2023. Vacancy rates remained below 3% for the 12th straight quarter.

A total of 585 purpose-built rental units started construction in the GTHA in Q3-2024, a 40% year-over-year decline, with zero rental starts recorded in the City of Toronto in Q3. City of Toronto rental starts totaling 2,531 units in the year-to-date period were down 17% from the same period in 2023 and have dropped 42% from the same period in 2021. Across the GTHA, a total of 22,199 purpose-built rentals were under construction as of Q3-2024, representing a 7% drop from the previous quarter as starts slowed and completions rose to a more than 30-year high of 2,319 units.

“The latest quarter provided a good lesson that large increases in supply can bring down rents. However, this should be viewed as a temporary adjustment as completions for both condos and rentals will begin to fall dramatically in the coming years given the latest trends for construction starts.”

Shaun Hildebrand, President of Urbanation