Condominium rents in the GTA plunged by 14.1% year-over-year last quarter, with an especially pronounced decline in downtown Toronto where they fell by 17.2%, according to an Urbanation report.

GTA condo rents still averaged $2,076 in Q4-2020—the lowest since the second quarter of 2017—and the rent price per square decreased by 13% to $2.95, the first time they have been below $3 since Q1-2018. In the City of Toronto, condo rents declined to $2,104, while the outer 416 regions of North York, Etobicoke, and Scarborough saw 12.7% drops to $2,036. The 905 region had condo rents of $2,050.

However, the GTA’s condo rental market saw lease transactions surge by 25% last year to a record high of 38,366, according to Urbanation, but rents declined because a deluge of units also entered the market—the number of rental units jumped 46% in 2020—which caused active listings to surge by 162% to 8,066 units. Consequently, rental inventory climbed to two months from 1.4 at the end of 2019—but it’s also down from 3.3 months at the end of Q2-2020. Moreover, impelled by lower rents, two-thirds of leasing activity in the GTA last year occurred during H2.

The City of Toronto’s vacancy rate for purpose-built rentals upsurged to 5.7% during the fourth quarter of 2020—a 1.1% year-over-year increase, and a 50-year high—according to the report.

“The GTA rental market faced its toughest challenges to date in 2020 due to COVID-19,” Shaun Hildebrand, president of Urbanation, said in the company’s latest research report. “While rents have a long way to go before returning to their peak and supply will continue to be a headwind in the near-term, some improvement can be expected in 2021 as vaccinations eventually lead to higher immigration and at least a partial return to the office for downtown workers and in-class learning for post-secondary students.”

The survey, which only surveyed apartment buildings completed in the last 15 years, determined that vacancy rates are lower in Toronto’s suburbs than in the city proper, rising by 0.8% to 2% last quarter. However, the report also noted that the 905 region had less purpose-built rental inventory and that it benefited from an exodus of Toronto residents. Region-wide, the vacancy rate increased to 4.6% in the fourth quarter of last year from 3.6% in Q4-2019.

“Actual rents landlords can get from new tenants is falling, so there’s clearly more supply than demand,” Phil Soper, president and CEO of Royal LePage, CREW. “One of the mistakes people make is assuming everybody is abandoning the cities. In fact, a major contributor, perhaps the major contributor, is missing demand altogether. It’s missing demand that comes from foreign students, domestic students and new Canadians.”

Additionally, Soper says COVID-19-induced unemployment hit renters the hardest, but he added that the desire to live in downtown cores like Toronto’s hasn’t dissipated.

“There’s a bump in unemployment in the country, which disproportionately skews to renters, and you get another group of people not able to rent. Does that mean people are abandoning cities for the country? No. It means a material portion of rental demand is temporarily unable to rent, but all of it is coming back.”

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