Toronto’s Condo Market Tightens in Q2, with Rents Outpacing Inflation

Toronto’s Condo Market Tightens in Q2, with Rents Outpacing Inflation
According to the latest data from the Toronto Regional Real Estate Board (TRREB), the condo market in Toronto continued to tighten in the second quarter of 2023. Sales surged “strongly” year over year, while new listings struggled to keep up with the pace.During the quarter, there were a total of 6,844 condominium apartment sales, representing a significant increase of over 20% compared to the previous year. However, new condo listings dropped by more than 13%.As a result of this disparity, active condo listings at the end of Q2 2023 were down by 8% compared to the same period in 2022, as stated in the report.

TRREB President, Paul Baron, attributes the rise in sales to the “extremely competitive rental market.” Nevertheless, he points out that “average condo selling prices remain below last year’s levels, which has helped from an affordability perspective.”

The average selling price of condos in the Greater Toronto Area (GTA) was $737,868 in Q2, showing a decrease of 4.2% compared to the same quarter in 2022. Focusing on the City of Toronto, which accounted for two-thirds of total condo sales, the average selling price was $769,616, marking a decline of 3.3% from Q2 2022.

Despite the current affordability, Baron warns that if the sales continue to outpace the number of available listings, condo prices are likely to trend upward in the coming months.

Additionally, a separate TRREB report reveals that average condo apartment rents continued to “well outpace” inflation in the second quarter, extending a two-year trend. One-bedroom condo rents grew by 11.6% to reach an average of $2,532 in Q2 2023, while two-bedroom rents climbed 9.2% to reach an average of $3,264.

During the Q2 2022 to Q2 2023 period, the number of condominium apartment rentals reported through TRREB’s MLS® System increased by 5.4%, while the number of condo apartments listed for rent rose at a higher annual rate of 15.4%.

Despite the growth in rental listings, competition among renters remained fierce, contributing to the higher average rents, according to the report.

TRREB Chief Market Analyst, Jason Mercer, views the growth in new condo rental listings as encouraging. He suggests that if this trend persists over the long term, the pace of rent growth may slow down. However, it will take time to address the rental housing deficit that has accumulated over the past few years. Mercer emphasizes the importance of more purpose-built rental units coming online to complement investor-owned condominium apartments, which have dominated the new rental stock in the GTA over the past decade.