Rent prices across the Toronto area may have just dropped by the most substantial amount outside of the pandemic months, but that doesn't mean that the cost of living is getting any more affordable for tenants, according to a new report on the city's rental landscape.

Year-end data from Urbanation shows that in the last quarter of 2023, the monthly cost to rent the average condo in the GTA dropped by 5.7 per cent, which is the largest quarterly price decline ever recorded by the firm aside from during the COVID-era lull.

But, at $3.97 per square foot (or $2,821 for a unit of an average 710 square feet), rent prices were still up 4.5 per cent when compared to the same time the year prior, and a whopping 20.7 per cent higher than at the end of 2021.

It's finally getting cheaper to rent in Toronto but only for some people🤔https://t.co/Qxaf0ebsvF #Toronto #TorontoRealEstate

— blogTO (@blogTO) December 15, 2023

"The quarterly decrease is likely related to a reduction in affordability following a surge in rents during the preceding two-quarter period, which brought the average rent up to a record high in Q3-2023," the firm said in a release on Tuesday, noting that Q3 prices hit $4.21 per square foot, or a whopping $2,937 for the typical 697 square-foot unit.

The experts also added that the region saw a "dramatic decline" in affordable rentals in the last year, which has pulled overall rental affordability down.

"The number of condo units renting for under $2,250 per month dropped 75 per cent in 2023 compared to 2022, with a reduction in leasing market share from 25 per cent to 6 per cent," they wrote.

"The least expensive condo units renting for below $2,000 experienced a 91 per cent plunge in lease activity last year, representing less than one per cent of rental leasing in 2023."

Like condo rentals, the average price of purpose-built rental apartments also fell between the two latter quarters of last year, but to a lesser degree of 3.5 per cent. This still marked a 4.3 per cent hike in rents for these types of units year-over-year.

But, there was some hope in the form of an increase in rental supply (both of new and older units) which Urbanation says started bring more balance back to the market by year's end, even if prices remain ridiculous.

Particularly exciting was the commencement of work on 2,147 new units across the GTA in the last quarter of 2023 alone, which is a 10-quarter high, bringing total new construction starts for the year to 5,085 — a whopping 132 per cent jump from 2022, but still four per cent less than in 2021.

By the end of December, 18,255 new rental homes were actively being built in the region.

It's understandable how living in a quasi-dystopian hellhole could be unappealing to potential renters, thus bringing prices down.

— Howdy (@Howdycentral) November 14, 2023

Unfortunately, the firm doubts that the balance spurred by new supply or the dropping prices will bring any lasting change to the market.

"The recent moderation in the rental market is likely a temporary response to overheated conditions that emerged in the past two years," they said.

"The fundamentals still indicate an undersupplied market will remain. While the recent increase in rental construction is a positive sign, much more progress will be needed before we will see long-lasting supply benefits."

Per the Rentals.ca and Urbanation National Rent Report for January 2024, the average monthly price for a one-bedroom rental in Toronto is now $2,521, while a two-bedroom place is $3,314. Both figures mark small declines of 2.8 to 3.9 per cent from the month prior, but small spikes (of 2.6 to 3.1 per cent) from the same time last year.