Toronto apartment rents fall for the first time in three years, may rebound in the future
According to data from real estate consulting and market research firm Urbanation Inc., the average apartment rent in the second quarter of this year fell by 1.2% year-on-year, marking the first annual decline since the outbreak of the COVID-19 pandemic in 2021. However, Urbanation warns that this relief may not last long.
The report shows that the average apartment rent in Toronto is now 3.97 yuan per square foot, which is equivalent to a typical 686 square foot unit renting 2723 yuan per month.
The rental price of a single room apartment has dropped the most, by 3.9%, with a typical rent of $2047 per 395 square foot unit.
The rent for a one bedroom apartment has also dropped by 1.8%, with the rent for a 591 square foot unit at 2450 yuan.
The rent for a two bedroom apartment has dropped by 0.9%, and the rent for an 889 square foot unit is 3143 yuan.
The rent for a three bedroom apartment remains relatively stable, with only a 0.6% decrease, and the rent for a 1041 square foot unit is 3988 yuan.
The 905 area outside of Greater Toronto is the only area where rent has increased by 2.0%, with a rent of $2610 per 719 square foot unit. In contrast, the average rent in downtown Toronto has dropped by 2.1%, with a rent of $2765 for a 674 square foot unit.
Despite the decline in rent, the demand for renting remains high. Toronto recorded a record breaking 16169 apartment rental transactions in the second quarter, a 29% increase from the previous year. Normally, high demand puts upward pressure on prices, but due to a surge in listings (with a 47% increase in the total number of apartments and an 82% increase in newly registered apartments), rents have decreased.
Urbanation President Shaun Hildebrand pointed out that the current rental decline is due to a temporary surge in apartment completion, and he said that this situation will subside as new apartment sales and construction decrease.
In the second quarter, 1558 new units of specialized rental housing were started, an increase of 43% compared to last year. The total number of construction units reached 3131, a year-on-year increase of 13%, an increase of 190% from the beginning of 2022, and still 32% lower than the first half of 2021.
During the same period, there were 23376 dedicated rental units under construction in Toronto, and 159176 units had submitted proposals, including 67431 approved units.
Hildebrand believes that the level of construction will not be able to keep up with future long-term demand, and rents will rise again.
Source link:
https://financialpost.com/real-estate/toronto-rent-hits-three-year-comeback-awaits