In the City of Toronto, the vacancy rate rose to 2.3%, slightly above its 10-year historical average . Increased supply and competition from a record number of condominiums entering the long-term rental market were the primary drivers.

An elevated number of condominium projects were completed in the City of Toronto over the past year, with 45% of their units rented out (up from the trailing 5-year average of 40% for new projects). This led to a significant influx of condominium rentals in the area, providing much greater choice to renters. Faced with more competition, new purpose-built rental units remained vacant for longer, according to local market intelligence.

Suburban areas of the Greater Toronto Area (GTA) (comprising Durham, York, Peel and Halton Regions) also saw a higher vacancy rate (3.3%) as supply outpaced growth in demand. Increased demand, as measured by growth in the number of occupied units, was particularly evident in the Durham, York and Halton Regions. Historically, lower rents and larger unit sizes in these areas have appealed to prospective renters.

The vacancy rate for rented condominium apartments in the GTA remained unchanged

A record infusion of condominium apartment rental supply was promptly leased, keeping the vacancy rate steady at 0.7%. Condominium apartment investors had less capacity for financial losses than landlords in the purpose-built rental market and were willing to make concessions, such as reducing rents, to get their units leased quickly.

We saw average annual rent reductions of around 1% in and around the City of Toronto's downtown core, where most new rental condominium apartments were built. Elsewhere in the GTA, condominium apartment rents were mostly stable.

Purpose-built rental supply in the GTA expanded at its quickest pace per data going back to 1990

Growth in rental supply (2.8%) was broad-based. However, the pace of increase was higher in the suburban GTA at 3.9% . Municipalities in these areas saw increased development due to their rapid population growth in recent years. As well, local market intelligence indicated some projects were more viable in the suburbs.

Within the City of Toronto, the expansion of the rental stock (2.5%) was led by the Former City of Toronto. However, all sub-regions of the City posted a stronger-than-usual pace of rental supply growth. This result was particularly notable for Etobicoke, North York and Scarborough, as vacancy rates in these areas have persistently held below the City average.

Purpose-built apartment rents in the GTA increased at the slowest pace in 3 years

The slowing rent growth was primarily concentrated in the City of Toronto, dropping from 8.7% to 2.4% annually for 2-bedroom units. Landlords in the City faced greater competition from the growing supply of purpose-built and condominium rentals.

Newer buildings, built 2005 and onward, appear to have led the slowing rent growth. This portion of the stock, which recorded the highest vacancy rates (Table 1.2.1), would have competed more directly with the wave of new rental units entering the market in 2024.

Rental affordability challenges in the region persisted

Average 2-bedroom rents in the GTA increased (2.7%) by less than average earning growth (4.9% — per Statistics Canada). This implied a modest improvement in rental affordability following years of erosion. Moreover, other affordability-related challenges were still readily apparent in the data:

• Turnover reached a new low, due in part to the 28 to 43% premium an existing tenant would have to pay on average to rent a vacant unit at the market rate.
• Supply remained scarce for low-income renters, with a vacancy rate of only 0.4% for the least expensive units (the 1st quartile, which represents the bottom 25% of rents) .
• The share of purpose-built rentals in arrears was at its second-highest recorded level .   

Source: CMHC