With fewer rental homes coming online, market conditions tightened in the Greater Toronto Area during the first quarter of 2022, forcing average prices upward.
New findings released by the Toronto Regional Real Estate Board (TRREB) show that rental transactions were down in Q1-2022 as the amount of available rental listings fell at an even greater rate. This trend fuelled competition amongst renters, causing prices to surge.
In Q1-2022, the average rent for a one-bedroom condo apartment rose 17.8 per cent to $2,145, up $325 from Q1-2021’s average of $1,820. Prices for two-bedroom apartments increased at a similar rate, rising 17.2 per cent year-over-year from $2,446 in Q1-2021 to $2,867 in Q1-2022, a $421 difference. Rents for GTA bachelor apartments increased the most, jumping 23.3 per cent from $1,404 in Q1-2021 to $1,730 in Q1-2022.
Compared to the market’s pre-pandemic peak in Q3-2019, the average one-bedroom rental in the GTA used to cost $2,262 and the average two-bedroom typically rented for $2,941.
“Over the past year, we have seen an upward trend in average condominium apartment rents. This
rebound in the rental market took hold as population growth accelerated throughout last year,” said TRREB’s chief market analyst, Jason Mercer, in the rental report.
“Demand for rental accommodation is expected to remain strong this year and beyond, as job growth continues, immigration and non-permanent migration continues to support housing demand, and higher borrowing costs see some young people put their decision to purchase a home on hold,” he added.
Rental transactions fall over 23 per cent from 2021
Last quarter, the GTA reported 10,110 condo apartment rental transactions through its MLS systems. This marks a 23.2 per cent drop compared to Q1-2021 when 13,162 units were leased.
However, rental transactions as a share of listings were up on a yearly basis in Q1-2022, “suggesting that demand remained strong while the supply of available units dipped.” In the first quarter of 2022, 16,476 rental apartments were listed, 12,227 fewer than the 28,703 listings that came online during Q1-2021, marking a 42.6 per cent year-over-year drop in supply.
For townhome rentals specifically, the number of units leased fell 5.3 per cent from Q1-2021 to Q1-2022, as did the quantity of townhomes listed by 15 per cent.
One-bedroom apartments accounted for the majority of units leased last quarter, with 5,974 units rented in Q1-2022, down 24.4 per cent compared to the 7,899 one-bedroom leases in Q1-2021.
Kevin Crigger, president of TRREB, noted in the rental market report that immigration will be at record levels over the next two years, while the number of non-permanent residents and students will also rise.
“Many of them will turn, at least initially, to the rental market. Investor-owned condominium apartments will be a key source of rental supply in the region. It is clear that rental demand is increasing relative to available units,” he said. “While the homeownership market often dominates the headlines, policymakers also need to be cognizant about the need for rental housing supply as we move forward.”
