When it comes to how the pandemic has affected the Toronto region’s housing market, rental apartments and condos in the city’s downtown neighbourhoods have borne the brunt of the negative impacts up to this point.
Eight neighbourhoods located in the city’s core and adjacent areas saw annual rent price declines in the double-digits in August, with the Waterfront Communities area leading the way with a 16 percent fall over the previous year.
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Rentals.ca and Bullpen Research and Consulting released the data this week, noting in their commentary that aggregate rent price declines currently being observed at the Toronto regional level “can be attributed to a significant drop in demand for condo rentals downtown.”
Joining the Waterfront Communities in the double-digit rent decline ranks were South Parkdale, The Annex, Church-Yonge Corridor, Niagara, Bay Street Corridor, Mount Pleasant West and Moss Park with drops ranging from 11 percent to just over 15 percent.
Declines of this magnitude have translated into considerable savings for renters. In the Waterfront Communities, a tenant would have expected to pay $2,774 for the average rental a year ago. This year, the average rent has dropped to $2,331 in this neighbourhood, or $443 lower than 2019’s average. In South Parkdale, the average rent declined from $2,321 to $1,963, a 15.4 percent annual drop and the second largest observed in the Rentals.ca and Bullpen report.
“The pandemic and the resulting work-from-home necessity has continued to put pressure on the downtown Toronto rental market,” said Rentals.ca CEO Matt Danison. “Less immigration, fewer students, and less need to be close to work is decreasing demand, in the face of increasing new condo and rental apartment completions.”
The declines are expected to continue, according to the report. More rental supply is on the way with purpose-built rental construction in Toronto running at a 40-year high as of the end of June. The report from Rentals.ca and Bullpen also noted that household formation will remain “stunted” as job growth sputters and fewer newcomers arrive in the city.
Of course, it’s worth noting that not all observers would see the downtown rent price declines and reduction in market competition as a negative impact. Last fall, RBC Senior Economist Robert Hogue singled out Toronto as the city with the “worst rental supply deficit in Canada.”
Now, with supply increasing, rent prices dropping, and a temporary pause on immigration to the city causing demand to fall, the Toronto market may have some time to shift into friendlier territory for renters.