After years of rising rents, tenants across the Greater Toronto and Hamilton Area (GTHA) are finally seeing a dip in prices — but experts warn that the downward trend may not last much longer.
A new report by real estate research firm Urbanation reveals that average condo rents in the GTA dropped 2.2 per cent year-over-year in the first quarter of 2025, marking the fourth consecutive quarter of annual declines. The current average stands at $2,612, down 10 per cent from the record high of $2,925 reached in Q3 of 2023.
Urbanation attributes the softening of the rental market to a surge in new supply. More than 2,100 units were completed in the first three months of the year — a 173 per cent increase from the same time last year, and the second-highest number recorded in a single quarter over the past 30 years. “This is a good lesson that more supply can help bring down costs for renters,” said Urbanation President Shaun Hilderbrand.
But the trend may soon reverse. Hilderbrand cautioned that new construction is slowing, which could squeeze supply again in the near future. Only 731 purpose-built rental units began construction in the first quarter of 2025 — a steep 60 per cent drop from last year and a nine-quarter low. That number also falls 41 per cent below the five-year average, with the sharpest declines observed in the suburban 905 region.
Even in Toronto, construction momentum is slowing. The city has 16,459 units currently under construction, the lowest level since 2023, suggesting that future rental inventory may fall short of demand.
Vacancy rates have increased slightly in response to recent completions. The overall vacancy rate for purpose-built rentals reached 3.5 per cent in Q1, up from 2.6 per cent a year earlier. Toronto posted a 3.7 per cent vacancy rate, while the 905 region recorded three per cent. The report also found that smaller units, such as studios, had the highest vacancy rate at 6.2 per cent, whereas three-bedroom units remained the most in demand with the lowest vacancy at 2.8 per cent.
While renters may currently enjoy a rare break in affordability, the cooling could be short-term — especially if construction trends continue downward and population growth keeps demand high.