Toronto Rental Market Update Eases With New Supply

The Toronto rental market continued to show signs of price moderation in mid-2025, with various sources reporting year-over-year rent declines across unit types. 

Declines were seen in both purpose-built and condominium rental rates, along with rising vacancies and available listings, particularly in the condo segment. 

Purpose-Built Rentals

Among purpose-built rental buildings completed since 2000, the average asking rent (or “face rent”) was $2,909 in Q2-2025, or $4.06 per square foot. While that represents only a 0.8% decline year-over-year, the apparent stability in pricing is misleading.

When adjusted for incentives offered by landlords, which are now present in 65% of surveyed buildings, up from 36% a year earlier, according to Urbanation, the average effective rent falls to $3.56 per square foot (psf), reflecting a 6.4% annual decline in effective rents. In the City of Toronto specifically, incentive-adjusted rents dropped by 7.2% year-over-year to $3.82 per square foot.

A growing number of landlords are now offering up to two months of free rent; 24% of buildings are doing this, up from just 4% a year earlier. An additional 39% offer 1.5 months free, compared to 25% the year before.

Condo Rentals

Toronto’s secondary condo rental market also saw rent declines in Q2-2025, driven by a surge in available units and weakening lease absorption.

A record 18,119 condo lease transactions were completed in Q2, up 10% year-over-year. However, this was outpaced by a 13% increase in condo rental listings. The resulting leases-to-listings ratio fell to 73%, the lowest since 2020, signaling rising competition among landlords and greater tenant choice.

Average condo rents dropped to $2,589, or $3.79 psf, for a 4.5% annual decline and the lowest level seen in three years.

*Rentals.ca includes a wider range of unit types, including basement apartments and small landlord listings, beyond the investor-held condos tracked by Urbanation.

Vacancy Rates Rise as New Supply Hits the Market

Vacancy rates across the GTHA are climbing in response to a surge of new rental completions and a moderation in immigration-fueled demand. In Q2-2025, the vacancy rate in purpose-built rental buildings completed since 2000 rose to 3.5%, up from 2.7% a year earlier. Toronto proper recorded a vacancy rate of 3.2%, while suburban areas in the 905 Region climbed more sharply to 4.0%, up from 2.8% in Q2-2024.

This softening in occupancy coincides with a construction-driven increase in available units. A total of 3,156 new purpose-built rentals reached occupancy in the first half of 2025, for a 77% increase from the same period in 2024 and 49% from 2023. However, despite this surge in completions, new construction starts have plateaued. Only 3,446 units broke ground in the first half of the year, nearly identical to 2024 (3,625) and 2023 (3,355). Meanwhile, the number of purpose-built rental units under construction across the region remains flat at 24,520, compared to 24,684 a year ago.

Shared Accommodation Market: Smaller Decline in Toronto

In June, average asking rents for shared units (room rentals) in Toronto declined by 3.9% year-over-year, to $1,188, according to Rentals.ca. This marks the seventh consecutive month of annual declines for shared accommodations nationally, though Toronto’s drop is less severe than declines seen in cities like Vancouver and Calgary.

Temporary Relief, But Pressure Could Rebuild

Both the purpose-built and condo rental segments in Toronto are under pressure from rising inventory and softer demand. Tenants are benefitting from increased choice, more generous incentives, and a temporary pullback in prices. However, with new construction starts stagnating and a drop in condo completions expected in 2026, market conditions could tighten again.