Condo rental prices climbed at a record pace in the Greater Toronto Area during the second quarter of this year following a sharp drop in available homes to rent, according to industry tracker Urbanation Inc.

Urbanation found that the average rental price per square foot rose 5.9 per cent quarter-over-quarter to a new high of $2,533. As well, annual rental growth prices rose by a record pace of 16.7 per cent in the second quarter, the data showed.

The decline in condo inventory comes at a time when some buyers are being priced out of the housing market because of the rising interest rates. Urbanation also pointed toward strong population growth and near record-low unemployment in the GTA have contributed to the growing rental demand.

“The GTA rental market was as strong as ever heading into the peak summer months, which is sure to place further downward pressure vacancies and upward pressure on rents,” according to Shaun Hildebrand, president of Urbanation, in a statement.

Urbanation said tenants sought smaller and more affordable condo units to rent, a segment that reported stronger rental growth than larger spaces.  That demand caused the overall vacancy rate in the GTA to fall to 1.4 per cent from 5.1 per cent a year earlier.

Rental supply is expected to remain tight as new rental construction almost completely stopped in the second quarter of 2022 with only 87 rental starts, compared to the average of 1,916 starts during the preceding four-quarter period.