The Greater Toronto Area's condo market continues to remain hot, with sales up over 20% year-over-year in the final quarter of 2020, as owners using their condos as short- and long-term rentals sold their units.

At the same time, falling rents and an active renters market pushed the average selling price of a condo in Toronto down 2.4% year-over-year to $644,044, a new report from the Toronto Regional Real Estate Board (TRREB) revealed Wednesday.

According to the latest data, condo sales totalled 6,469 in the fourth quarter – up 20.7% compared to 5,358 in Q4 2019. Though, at the same time, the number of new listings amounted to 12,298 – a staggering 91.9% increase over Q4 2019, while active listings totalled 4,294 at the end of Q4, which was more than double than what was recorded in the same time in the previous year. 

“While the prominent storyline has been the strong increase in condo listings over the last 12 months, it is important to point out that the demand for condominium apartments has remained very strong, with sales up substantially compared to 2019," said Lisa Patel, TRREB President. 

Patel says the increase in supply stems from investors selling their units as both the traditional and short-term rental markets softened along with the looming possibility of Toronto's vacancy tax.

Coupled together, this resulted in more choice and bargaining power for buyers and a moderate decline in average selling prices, said Patel.

READ: Median Downtown Condo Price Down Nearly $60K Year-Over-Year in December

Overall, the average selling price of a condo in the GTA was down 1.1% year-over-year in the fourth quarter to $610,044. Locally, the average selling price reached $644,516, down by 2.4% over the same period, with 4,355 units sold. 

TRREB noted that year-over-year price declines were especially evident for smaller units in the Toronto, where investor-driven supply increases were strong.

Simultaneously, rental activity soared 86.3% across the region as rent prices plunged 16.5% year-over-year in Q4. The number of available units rose a massive 131.6%, with TRREB finding 12,584 units were rented during the final quarter of 2020, compared to 6,756 during the same time in 2019. 

Patel said that while the demand for rentals reached "record highs" the growth of the number of available units far outstripped rental transactions.

"The result was much more choice and negotiating power for renters and a downward adjustment in average rents,” added Patel. 

The price of a one-bedroom condo rental fell 16.5% to $1,845 in the fourth quarter from $2,209 a year earlier. On the other hand, a two-bedroom rental fell 14.5% to $2,453 compared to $2,868 the year before.

“As we move through 2021, rental demand will remain strong as the economic situation continues to improve, especially as the pace of the vaccine rollout increases and immigration and non-permanent migration into the GTA accelerates," said Jason Mercer, TRREB’s Chief Market Analyst.

Mercer said that this will eventually result in much of the current rental unit inventory being absorbed, though, market conditions will likely continue to favour renters through most of 2021. 

The report comes as Toronto's condo market continues to see record growth, with January already seeing condo sales nearly double the activity of 2020 on a year-to-date basis, with the month’s condo sales, recorded on January 15, up 92% over those of recorded during the same time last year.