A rise in supply caused rent prices in the GTHA to fall in the first quarter of 2025 compared to the first quarter of 2024, a new report has found — and prices are expected to continue softening through the rest of the year.
Prices for purpose-built-rentals fell 2.2 per cent while condo rent prices dropped 2.8 per cent, according to an Urbanation report published Wednesday.
Rental apartments completed since 2000 averaged $2,909 a month or $4.05 a square foot for a 719-square-foot unit.
Condo rentals, meanwhile, cost $2,612 a month on average, or $3.78 a square foot for an average 692-square-foot unit.
Prices dipped for an 11th consecutive quarter, down 10 per cent from the record high seen in the third quarter of 2023, the report noted.
The increased affordability was the result of purpose-built rental completions and condo completions introducing more competition, said Michael Niezgoda, Urbanation’s senior manager of market research and development.
More than 2,100 purpose-built rental apartments were completed in the first quarter of 2025 — a 173 per cent increase from the same time last year and the second highest quarterly total in the past 30 years, the report said.
As such, the vacancy rate was 3.5 per cent, unchanged from the previous quarter but up from 2.6 per cent one year prior. It remained at its highest level since the first quarter of 2021.
Studio apartments had the highest vacancy rate at 6.2 per cent, up from 3.6 per a year prior, Niezgoda said.
“We’ve been building a lot more smaller unit types over the past few years,” he said, “and now as these projects complete, we’re maybe seeing that we’ve overbuilt (them).”
In Toronto, the vacancy rate across purpose-built rental apartments grew from 2.9 per cent in the first quarter of 2024 to 3.7 per cent in the first quarter of this year, he added.
The first quarter of the year also saw landlords competing with new units by offering rental incentives.
In the first quarter of the year, 63 per cent of post-2000 purpose-built apartments offered new tenants incentives to sign a lease, such as a month or two of free rent — double the amount operators offered a year prior.
The number of rental operators offering one month of free rent doubled to 39 per cent while the number of rental operators offering two months of free rent grew from just one per cent to a “striking” 23 per cent, Niezgoda said.
“It will be interesting to see if the trends continues into next quarter,” he said, “but we’re beginning to see some signs of rental apartment operators dropping the base rents (too).”
He also noted rent prices have dropped by 5 cents a square foot on average compared to the prior quarter.
Among condos, Urbanation found rent prices increased 2.6 per cent over the last five years — a softening from the five per cent growth over the last decade.
“In the same time, we’re averaging 22,000 condo completions per year,” Niezgoda said, “which is 20 per cent higher than the decade average.”
While he expects rent prices to continue falling and landlords to continue offering incentives until the rest of the year or into 2026, it’s hard to tell what will happen in the second half of next year.
Urbanation is expecting condo and rental apartment completions to continue to be high until mid-2026, with “much fewer afterwards,” Niezgoda added.
