Increases to Rental Supply Helping to Improve Affordability

TORONTO – April 30, 2025:  Urbanation Inc., the leading source of data and analysis on the Greater Toronto Hamilton Area (GTHA) condominium and rental apartment markets since 1981, released its Q1-2025 rental market results today.

The vacancy rate for purpose-built rentals completed since 2000 in the GTHA was 3.5% in Q1-2025, unchanged from Q4-2024 but increasing from 2.6% in Q1-2024 and remaining at its highest level since Q2-2021. 

In the City of Toronto, vacancy rates reached 3.7% in Q1-2025, while rising to 3.0% in the 905 Region of the GTHA. Vacancy rates were highest for studios at 6.2%, with one-bedroom and two-bedroom vacancy rates of 3.4% and 3.5%, respectively. Three-bedroom vacancy rates remained lowest at 2.8%.

Rents for purpose-built rentals available in buildings completed since 2000 averaged $4.05 per square foot (psf) during Q1-2025, based on an average monthly rent of $2,909 and an average unit size of 719 square feet (sf). Rents decreased 2.2% from a year ago. Additionally, it was found that a 63% share of buildings offered incentives in Q1-2025, doubling the 31% share from a year ago in Q1-2024. A 39% share of projects offered one month of free rent, while 23% offered two months of free rent. Overall, when adjusting for free rent periods and other financial incentives, the average rent in Q1-2025 was calculated at $3.64 psf, down 7% from the average rent adjusted for incentives in Q1-2024 ($3.90 psf).

The rental market has experienced some softening as supply has increased. Purpose-built rental completions totaled 2,136 units in Q1-2025, increasing 173% from the same period last year and representing the second highest quarterly total of the past 30 years. This was in addition to the record number of condo completions currently underway, adding to the growth in rental supply.

Active condo rental listings available for lease at the end of Q1-2025 totaled 6,549 units, increasing 29% from a year ago and 160% higher than two years ago. This represented 1.4 months of supply based on the record-high volume of condo lease transactions over the past 12 months, rising 47% higher than the 10-year average of 0.95 months of supply. As a result, average condo rents declined on an annual basis for the fourth consecutive quarter in Q1-2025, decreasing 2.8% to $3.78 psf ($2,612 for 692 sf) — an 11-quarter low. Condo rents are down 10.0% from the record high of $4.20 psf ($2,925 for 697 sf) in Q3-2023.

Supply pressures on the rental market will eventually begin to subside as completions drop due to the current slowdown in construction. In Q1-2025, a total of 731 purpose-built rental units started construction in the GTHA, dropping 60% from the same period a year earlier and falling 41% below the latest five-year average. As a result, the total number of purpose-built rentals under construction in the GTHA declined to a nine-quarter low of 21,866 units. Most of the decline in construction volume has been in the 905 Region, where the inventory of rental units underway fell to a 17-quarter low of 5,408 units. The 16,459 units under construction in the City of Toronto declined to its lowest level since Q3-2023.

“The rental market is undergoing a period of improved affordability thanks to recent increases in supply. This is a good lesson that more supply can help bring down costs for renters. However, this is not expected to last much longer given the current downtrend in construction for both purpose-built rentals and condominiums.”

Shaun Hildebrand, President of Urbanation