The cost of renting a one-bedroom condominium in Toronto has now risen more than 20% year-over-year as higher borrowing costs leave some potential buyers on the sidelines.
The latest data from the Toronto Region Real Estate Board shows that the average monthly cost of a one-bedroom condominium reached $2,481 in the third quarter of 2022, compared to $2,269 in the last quarter and $2,061 in the third quarter of 2021.
The average rental cost for a two-bedroom condo rose 14.5% year-over-year to $3,184.
Total enrollment, meanwhile, was down 25.6% year-over-year.
Transactions also decreased, but only by 17.3%, indicating a significant increase in competition for units.
“Immigration to the GTA as well as non-permanent migration for school and temporary employment have all increased markedly. Add to this the impact of higher borrowing costs on the property market and it becomes clear that demand for rental housing remains strong for the foreseeable future,” TRREB Chairman Kevin Crigger said in a statement. press release accompanying the data. “Investor-owned condos have been an important component of the rental stock for over a decade. However, the decline in rental listings over the past year is another warning sign for policymakers that the general lack of housing in the area extends to the rental market as well.
The Bank of Canada has now raised interest rates six times in a row so far in 2022, significantly raising the cost of borrowing.
The TRREB said that, in turn, left some buyers on the sidelines and put further upward pressure on rental prices.
TRREB data reveals Toronto’s condo vacancy rate now stands at 1.9% after surging above 5% at one point during the COVID-19 pandemic.
Vacancy rates in other parts of the GTA range from 0.3 to 0.9 per cent.
“Rental housing is an increasingly important piece of the housing puzzle,” Jason Mercer, TRREB’s chief market analyst, said in the news release. “While investor-owned condominium units have been an important source of supply, the current tight market conditions and average double-digit rental growth indicate the need for additional purpose-built inventory, the construction has been lacking in recent years.”
Although the TRREB data only includes condominiums and not purpose-built rental apartments, a separate report by Rentals.ca and Bullpen Research & Consulting earlier this month suggested that the asking price for overall rent has risen 31% over the past year in Toronto.