- Surge in rental listings is helping to relieve cost pressure
- Rents had been setting records amid surge in immigration
Rents for Toronto condos fell this year for the first time since 2021 as a surge in listings brought some relief to renters.
Average condo rents for leases signed in the second quarter declined 1.2% from the same three months last year, according to a report on the greater Toronto area released Tuesday by consultancy Urbanation. That’s the first annual decline since the second quarter of 2021, the report said.
Rents across Canada have been setting records in recent years as a surge in immigration boosted demand. The situation has prompted politicians to try to increase the pace of housing construction to address what’s widely seen as a severe shortage.
But in Toronto, Canada’s largest city, a surge in listings recently is helping to ease those costs. There, much of the rental stock in recent years has been supplied by condominiums bought by investors. A large number of condo completions caused rental listings to rise 47% last quarter from a year ago, according to Urbanation.
Falling rents are creating more bad news for condo investors, as the majority of those closing on new units with a mortgage this year could already expect to lose hundreds of dollars each month with interest payments and other costs outpacing potential income, according to a report earlier this month from Urbanation and Canadian Imperial Bank of Commerce.
Even the Bank of Canada’s recent moves to cut interest rates may not change this math, with the average monthly losses faced by investors in new Toronto condos already nearly C$600 ($433), the report said.
The spike in rental listings could be “temporary,” according to Urbanation President Shaun Hildebrand. The sales market for new condos has softened, given financial pressures for owners, and construction activity has been weaker as borrowing costs remain high.
The dip in rental costs may ease the housing pressure faced by some of the city’s residents, even if rents remain near recent highs. The reversal has so far failed to materialize in Toronto’s parallel market for purpose-built rental apartment buildings. In the market for those units that were completed since 2000, rent growth slowed to 2.2% as vacancies climbed to an 11-quarter high.
Written by: Ari Altstedter @Bloomberg
The post “Condo Rents in Toronto Decrease for First Time in Three Years” first appeared on Bloomberg