For the fourth consecutive month, prices for one-bedroom apartments and condo rentals in Toronto declined, according to new data released in this week’s National Rent Report by Rentals.ca.
One-bedroom rental prices dipped in June by 1.9 percent over the previous month and 9.3 percent annually to $2,063. Two-bedroom rentals recovered slightly month-over-month, creeping up 1.3 percent to $2,684, but were down annually by 4.4 percent.
While the majority of Canadian cities experienced rental price increases in June, Mississauga, North York and Halifax joined Toronto as areas that saw average price declines, dropping by 0.1 percent, 1 percent and 5 percent, respectively.
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“Tenant demand has returned to the market as lockdown restrictions end, and employers bring back furloughed employees and rehire staff,” said Matt Danison, CEO of Rentals.ca, in the press release. “But lost income due to COVID-19 and fear of a second wave are resulting in conservative housing choices.”
With a significant number of purpose-built rentals under construction in Toronto, the report predicted that a higher supply of units could put further downward pressure on rents. If the work-from-home trend persists, it’s possible that tenants will move outside of the city to avoid the risks of density while also finding cheaper accommodations.
The report also offered a counterpoint to this argument, speculating that fear of transit commutes will potentially motivate renters to look for apartments closer to work.
“It is possible the fear of transit (many cities in North American are experiencing ridership declines of 50 percent or more) might be the bigger issue, resulting in tenants looking for apartments close to work, so they can walk and avoid traffic and transit altogether,” explained the report.
With Canada’s resale housing market recovering substantially in June, alongside lower levels of immigration, high unemployment and the lifting of eviction bans, a further shift in the rental market landscape is likely on the horizon.
“Rental forecasting remains uncertain as the potential for greater mortgage defaults remain, eviction bans will soon expire, CERB payments will end, and our borders remain closed. There is data that suggests both rent increases and decreases are coming,” said Ben Myers, president of Bullpen Research & Consulting, in the report. “The average rent for all property types decreased nationally in June, but increased for rental apartments.”
“Resale housing activity picked up last month in several major municipalities over May, and low interest rates will continue to encourage people to buy, reducing rental demand,” he added.