Rental prices are up and vacancy rates are down across the Greater Toronto Area as the market continued to recover from COVID-19 challenges in Q3-2021.
In it’s Q3-2021 rental market results report released this week, real estate consulting firm Urbanation stated that the vacancy rate for purpose-built rental apartments in the GTA decreased to three per cent at the end of Q3-2021. This is down from the 5.1 per cent vacancy rate recorded in the previous business quarter, and less than half of the 6.4 per cent vacancy high logged during Q1-2021.
In the former City of Toronto — an area that mostly represents the downtown market — the vacancy rate dropped from 6.6 per cent in Q2-2021 to 3.8 per cent in Q3-2021, down considerably from nine per cent in Q1-2021.
“The rental market recovery heated up considerably during the third quarter as economic restrictions continued to be lifted and the population began returning back to the core,” said president of Urbanation, Shaun Hildebrand, in the report. “The stage has now been set for the GTA rental market to return to pre-COVID levels in short order.”
The average rent for units that were leased during Q3-2021 — and were available at the end of the business quarter within newer buildings that have been completed since 2005 — grew to $2,389, or $3.30 per square foot. This is a jump of 3.8 per cent from the previous quarter and a 1.7 per cent yearly increase, marking the first annual growth in rents recorded since the start of the pandemic.
Urbanation noted that the yearly rise in rents was related to a number of “relatively more expensive buildings” that reached completion this past year. When excluding these new buildings, rents dropped 1.8 per cent year-over-year in Q3-2021.
For GTA condo rentals specifically, the number of leases signed bumped up six per cent from last year to a total of 13,969 units, a new market high. Rental prices for GTA condos were also up in Q3-2021, jumping 8.2 per cent from Q2-2021 to $2,304, about $3.31 per square foot. Rent increases were the strongest in the former City of Toronto, where prices rose 11.4 per cent quarter-over-quarter and 6.2 per cent yearly to $2,405 or $3.62 per square foot.
Market conditions tightened last quarter as the ratio of leases-to-listings rose to 82 per cent, the highest level since Q3-2019. With the average days on the market falling to 16 days — the shortest time frame since Q3-2019 — active quarter-end listings fell 69 per cent from a year ago to 0.7 months worth of supply, the lowest amount of inventory on the market since Q3-2018.
Incentives for renters like move-in bonuses and free rent have been on the downturn. In Q2-2021, 88 per cent of buildings offered incentives, a number that has now dropped to 57 per cent in Q3-2021.
