The average monthly rent in the Greater Toronto Area (GTA) increased 10 per cent year over year in March to $2,182 from $1,975 in March 2021, according to the latest Bullpen Research & Consulting and TorontoRentals.com Toronto GTA Rent Report.
Since April 2021, the average rent has increased month over month for 10 of the last 12 months as the rental market trends back up after the height of the COVID-19 pandemic. Average monthly rents declined every month from January 2020 to March 2021.
With interest rates rising, some prospective buyers are likely to stay in the rental market this year instead of buying. The colder weather in March could have dissuaded some tire-kickers from looking at property, as could have the sixth wave of COVID-19.
Moving forward, new housing completions are expected to rise in the GTA in 2022 adding more supply. Persistent inflation will drive up the costs for landlords, and they will try to pass these on to tenants via higher rents. Rents are expected to continue to increase, but not at the same pace experienced in the second half of last year. After strong rent growth in the second half of last year, average rents in the GTA have started to flatten, with most of the major municipalities in the GTA experiencing monthly declines. The monthly declines are across the board by geography, property type and bedroom count.
A majority of the municipalities in the GTA had slight declines in average monthly rents for condo rentals and apartments. Toronto rents saw a month-over-month decline of 0.4 per cent; Mississauga had a monthly decline of 0.9 per cent; Etobicoke average monthly rents declined by 2.6 per cent; Scarborough experienced a monthly decline of 3.8 per cent and Brampton monthly rents were down 5.4 per cent.
“After very strong growth in the second half of 2021, average rental rates in the GTA have flattened out, with this trend consistent across property types, bedroom types and geographic areas,” said Ben Myers, president of Bullpen Research & Consulting. “Bullpen and Rentals.ca still expect rents to increase in 2022, but at a slower pace than previously forecasted.”
The spring market should see increased tenant demand, and with condo premiums rising from 15 per cent to 35 per cent in the major municipalities, the high end of the rental market is strong again and that could pull up rents in the near future.
In general, the price growth of condominiums has outpaced apartments over the past year. In Mississauga, the average rent for condos ($2,627) in the first quarter of this year was 34 per cent higher than the average rent for apartments ($1,955).
In Scarborough, the margin of rents for condos over apartments in the first quarter was 27 per cent; in Etobicoke, the difference was 26 per cent and in Toronto, where the condo premium is lower, the average rent for condos still outpaced the average rent for apartments by 15 per cent.
While condos consistently rent for higher prices than apartments because they are newer with more amenities, this premium declined during the pandemic as demand for expensive prime condo projects close to employment plummeted. But rents for condos have risen again as employees return to downtown offices and their places of employment.
Average rents for condominium rentals for studios, one-, two- and three-bedroom units have risen significantly in March from January 2021.
Average monthly rent for three-bedroom condo rentals was $3,534 in March, up 30 per cent from $2,716 in January 2021. Average rent for a two-bedroom condo in March was $2,819, up from $2,440 in January 2021; average rent for a one-bedroom in March was $2,161, up from $1,869 in January 2021 and average rent for a studio went from $1,552 in January 2021 to $1,719 in March.
For apartments, two-bedroom units saw the most notable increase, where the average rent in March was $2,306, up 10 per cent from $2,098 in January 2021.