Toronto tenants have a ‘window of opportunity’
City sees 1.3% drop in average asking rent, as prices rise 10.5% nationally
The average asking rent for apartments in Toronto fell 1.3 per cent from a year ago, following a trend in Canada’s more expensive cities as renters opted for more affordable markets, driving a 10.5 per cent increase in prices nationwide, a Rentals.ca and Urbanation analysis has found.
The average rental listing in Canada reached $2,193 in February, the fastest yearly growth since September 2023, according to the report released Monday. That’s a 21 per cent increase from February 2022, just before the Bank of Canada began its aggressive interest rate hike campaign to control inflation.
While cities such as Toronto and Vancouver are experiencing a slowdown in rental prices, other markets — particularly those in Alberta — are accelerating, said Shaun Hildebrand, president of real estate research firm Urbanation.
“Part of this is due to a temporary rise in supply from condo and rental projects that began construction a few years ago when interest rates were at record lows,” he said.
Hildebrand added the other factor to consider is waning demand, “as renters who are facing record-high housing and cost of living expenses are shifting to more affordable markets, either in the suburbs or cities outside of (Ontario), such as Calgary and Edmonton.”
In Toronto, landlords were asking $2,803, on average, for a rental unit in February — down slightly from $2,832 in January and 1.3 per cent from a year earlier.
Demand for purpose-built rentals in the city remains strong, particularly for smaller units and shared accommodations. In February, the average asking price for roommate rentals increased to $1,280 per month, compared to $1,225 in the same month a year earlier.
Studio apartments were the only housing type that reported annual rent growth, rising 3.4 per cent to $2,028 last month. The average one-bedroom remained flat at $2,514, while two-bedroom units fell 0.4 per cent to $3,312; and threebedrooms dropped 0.3 per cent to $3,833.
The slowdown in Toronto’s market follows a “rapid escalation” in rents in 2022 and the first half of 2023, following a surge in interest rates and population of non-permanent residents, Hildebrand said.
“The cooling that we’re seeing now is not totally unexpected,” he
said, partly because the rental market is generally slower during the winter.
Hildebrand expects that demand will remain strong, but supply will begin to decline as construction “dramatically slows” in the coming years, thanks to interest rate hikes making projects economically unfeasible.
“So our view is that this is a shortterm reprieve and a window of opportunity for renters right now.”
Nationally, the average listing for purpose-built rentals reached $2,110 in February, up 14.4 per cent from a year earlier.
Ontario and B.C. saw the slowest growth in asking rents for purposebuilt and condo units last month, with yearly increases of one per cent and 1.3 per cent, respectively.
Alberta was in the top spot with the fastest-growing rents, soaring 20 per cent annually from last year.