As Canada's real estate market continues to feel the effects of the COVID-19 pandemic, it looks like rental rates in the country's largest cities are finally starting to decline.
According to a report released Thursday by rental site PadMapper, rental rates in Canada took a hit in April, especially in Toronto and Vancouver.
For the first time since Padmapper started reporting on Canadian prices, Toronto rents were down on all fronts. In April, the average one-bedroom rent in Toronto dropped 2.2% month-over-month to $2,200 and two-bedroom rent fell 4.1% month-over-month to $2,830.
In Vancouver, while the average rent for a one-bedroom dropped 2.3% to $2,100 compared to March, the average two-bedroom rent stayed at $3,000, unchanged from the previous month.
As for the largest decline in rent in April, Montreal dropped out of the top five markets to rank as the 6th most expensive city, with one-bedroom rent falling 5.2% to $1,470 month-over-month. Two-bedrooms, on the other hand, decreased by 2.6% month-over-month to $1,850.
A big driver of declining rent prices in Toronto is most likely COVID-19, as people have been increasingly sheltered in place and open houses have come to a halt, leading to a natural slowdown in the rental market, Padmapper analyst Crystal Chen told Toronto Storeys.
"As demand drops, landlords in Shelter-in-Place cities have removed their listings until a time when they can show them again and tenants are cancelling their move-outs so landlords are taking these planned vacancies off the market," said Chen, adding, "the overall COVID-19 impact would be a downward pressure on rents."
Chen explained that since many renters have been negatively financially impacted by the pandemic and need more affordable housing, landlords who want to fill vacancies will either need to price down their units or offer incentives, like a month or two of free rent with a 12-13 month lease.
Another factor that may have impacted rental rates is that Toronto is already the most expensive city for rent in the country and has seen its rental prices climbing for long a time; Chen says a price ceiling may have been hit. As a result, renters are beginning to move to cheaper, neighbouring cities in the GTA to find some rent relief.
For example, one-bedroom rent in neighbouring Oshawa is up over 15% year-over-year, which shows a high demand there that may be driven by people moving out of Toronto. And considering the price difference between one-bedroom rent in Oshawa and Toronto is over $800 a month, this is definitely a solid option for renters who find themselves being priced out of Toronto.