Rent prices in Toronto rise by 'fastest pace on record'

GTA rent prices rose by “the fastest pace on record” in the second quarter of this year with the average one-bedroom unit being leased out for nearly $2,200 a month, a new report has found.

Urbanation Inc. say that rent prices rose for the fifth consecutive quarter due, in part, to “near record-low unemployment, and a sharp reduction in home purchasing power as interest rates increased.”

The market research firm says that average condo rents in the GTA were up 5.9 per cent from the first quarter of 2022 and 16.7 per cent year-over-year.

The average cost for a one-bedroom unit was $2,182 per month in the second quarter, while two-bedroom units were rented out at an average cost of $2,862 per month and three-bedroom units were rented out for $3,740 a month, on average.

• Download our app to get local alerts to your device
• Get the latest local updates right to your inbox

Urbanation says that vacancy rates in the GTA also plummeted, dropping from 5.1 per cent one year ago to 1.4 per cent today.

“Driving that growth is really just demand and supply moving in the opposite direction. On the demand side we have seen a reacceleration in population growth, we have a near record low unemployment rate and also a very strong deterioration in home ownership affordability with prices remaining near record highs, interest rates rising very quickly and a lot of first time buyers being shut out of the market,” Urbanation President Shaun Hildebrand told CTV News Channel on Tuesday. “So there has been a confluence of factors that have boosted demand at a time when supply just isn’t keeping pace. In fact, in the second quarter we recorded the lowest number of rental construction starts in the GTA that we have seen since we started tracking the data back in 2015.”

RELATED: New survey reveals how many Ontarians can't afford a house in their own city

According to the latest data, Toronto rent prices are now approaching their pre-pandemic level across most property types.

Studio apartment rent prices are down about one per cent from the second quarter of 2019 while units with dens saw gains of between 6.4 per cent and 9.4 per cent over the same time period as renters sought out additional space while working from home.

A woman looks out at the Toronto skyline from Sheldon Lookout during sunrise in Toronto on Friday, November 5, 2021. THE CANADIAN PRESS/Evan Buhler

Urbanation says that condo rental inventory also dropped to a record low of a third of a month’s supply in the second quarter, which could foreshadow further increases in the cost of rent particularly in the core.

“During the first year of the pandemic a lot of people were fleeing their small units in the downtown area as working from home became more common. So those rents dropped very quickly. But with offices reopening, entertainment venues reopening, schools reverting back to in-class learning and just high commuting costs in general we have seen demand for the core outstrip demand for the 905 for the first quarter since the pandemic began,” Hildebrand told CTV News Channel.