Toronto rental rates soared on a yearly basis in 2022, driven by high demand and inflationary pressures, a report from Urbanation Inc. revealed. 
The real estate consulting firm showed rent growth climbed 16.9 per cent annually in 2022 in comparison to the 0.5 per cent decline the year prior. 
A spike in immigration and foreign students is largely driving the upward pressure, the report released on Friday showed, alongside a decline in first-time homebuyers.
As for supply, the figures showed rental construction starts dropped 54 per cent to 3,442 units for the year after reaching a multi-decade high of 7,557 units in 2021.
The average cost to rent a condo in the Greater Toronto Area reached $2,752 per month in the fourth quarter of 2022, marking a $391 rise from the same time in 2021, the figures showed.
Renting a condo under $2,000 per month in the region dropped by 87 per cent over the past three years, with only 1.4 per cent of units leased in the fourth quarter of 2022 falling below the that price point, the data revealed. 
Despite the annual rise in rent, Urbanation expects to see more balance in 2023. 
“After surging throughout most of 2022, rents started to show signs of levelling out towards the end of the year, which should provide some temporary relief for renters,” Shaun Hildebrand, president of Urbanation, said in a press release. 
The signs of a cool down was reflected in the data as rent growth dipped 1.6 per cent in the quarter. 
Urbanation said in its report that a combination of an economic slowdown, a temporary rise in condo supply and affordability constraints should cause rent growth to moderate in the five per cent range, which is considered a historically normal level.
“Nonetheless, it’s clear that the negative direction for new construction and positive outlook for demand will continue placing strong upward pressure on rents in the years to come unless more action is taken to boost rental supply,” he said.