While home prices across the Greater Toronto Area continued their downward descent in the fourth quarter of 2022, prices of condominium apartments in the region remained resilient.
According to the Toronto Regional Real Estate Board's (TRREB) latest condo market report, the average selling price in Q4 2022 was $710,520, a hair above the Q4 2021 average of $710,246. A similar trend played out on a local level, with prices in nearly every municipality remaining relatively flat compared to a year ago.
Price differences of less than $3K were seen in the City of Toronto, Peel Region, and York Region. Halton Region and Durham Region experienced larger discrepancies -- prices jumped nearly $30K in the former, but were down by more than $13K in the latter.
"On average, the condo market segment is the most affordable," said TRREB President Paul Baron. "Therefore, it makes sense that we didn't see the same type of price adjustment, in the face of higher borrowing costs, compared to other more expensive segments like detached homes."
Although prices held relatively steady, sales tumbled 54.1% annually; just 3,582 condos changed hands across the GTA in Q4 2022, compared to 7,509 a year prior. New listings were also down year-over-year, albeit by a more muted 14.3%, while active listings shot up by 130.5%.
TRREB Chief Market Analyst Jason Mercer noted that condo apartments remain an "important segment of the market," acting as an entry point for many first-time buyers and serving as a vital source of rental supply across the GTA.
In stark contrast to unwavering sale prices, average condo rents in the GTA skyrocketed in Q4 2022. One-bedroom townhouses saw the largest price increase of all unit types, with rent rising 23.7% year over year to $2,320. One-bedroom apartments saw a 19% increase to $2,503.
The data, courtesy of TRREB's most recent rental market report, shows rent for bachelor apartments rising 20.4% annually in Q4 2022 to $2,072, while rent for two-bedroom apartments jumped 14.1% year over year to $3,178.
Only three-bedroom apartments and townhouses didn't experience double-digit annual rent increases, however, they were still up 6.3% and 9.2%, respectively.
Although the "very strong" rent growth was supported by tight market conditions, the rental market is more balanced than it was a year ago.
Just 8,687 condo apartments were leased across the GTA in Q4 2022, an annual decline of 19.9%, while new listings dropped by 11.8% year over year. As the number of units leased fell further than the number of units listed, TRREB noted that renters likely had more choice than they did in Q4 2021.
Rental demand in 2022 was driven by several key factors, including the Bank of Canada's incessant interest rate hikes, which impacted affordability and kept many would-be homebuyers in the the rental market. Strong population growth spurred by record immigration and job creation also contributed.
As the BoC has raised interest rates once more since the end of 2022 -- the eighth hike in 10 months, bringing the overnight lending rate to 4.5% -- and the Government of Canada plans to welcome 465K new permanent residents in 2023, the aforementioned factors will continue to influence rental demand in the coming year.
"Tight rental market conditions and strong rent increases will be the norm more often than not for the foreseeable future. On one hand, we will continue to experience strong rental demand in the GTA based on solid fundamentals. On the other hand, the persistent supply shortage will continue to result in strong competition between would-be renters, exerting upward pressure on rents," Mercer said.
"The solution is no secret: we need to see new policies pointed on more supply to translate into shovels in the ground for many years to come."
TRREB has urged Toronto City Council to implement a number of changes to the Municipal Land Transfer Tax, which they say would increase the supply of homes for sale — the lack thereof being the biggest source of affordability challenges — while also providing financial relief for homebuyers.