The average price for a two-bedroom apartment or condo in Toronto rose 24 per cent to $3,353 in October from a year earlier. Toronto saw the fastest growth of any large market in Canada over the past year. A rapid series of interest rates hikes by the Bank of Canada has been one of the biggest drivers of the rental market. People who would otherwise be looking at buying a house are instead deciding to keep renting.
The Bank of Canada raised its key overnight lending rate by 50 basis points (half a percentage point) to 3.75 per cent in October. In July, the Bank stunned observers by raising the overnight rate by a full percentage point, to 2.5 per cent. The overnight rate began the year at 0.25 per cent, where it had been since March 2020.
The work-from-home trend during COVID has also played a big role in driving prices. Even though many offices have moved to a hybrid model, that still means people are spending more time at home. People also want a nicer, larger place to live if they're in it all the time. Landlords are also raising rents so they can keep making their own, higher mortgage payments.
Post-secondary students looking for housing as universities and colleges shifted back to in-person learning also helped drive rents higher.