Toronto Real Estate Market Begins to Frost

The Greater Toronto Area housing market is cooling fast, with both average and benchmark prices slipping to near 5-year lows. The region’s benchmark home price, which tracks the price of a “typical” home, declined to $942,300, down 1.0% month-over-month and 6.3% year-over-year. That marks a seventh straight monthly decline and the lowest benchmark level since January 2021, before the pandemic-era housing boom.

The average home price followed the same trajectory, easing to $1,006,735 in December 2025, a 3.1% monthly drop and 5.7% annual decline. That’s also the lowest average GTA home price since January 2021. Median prices fell to $850,000, down 2.9% month-over-month and 8.6% year-over-year.

Prices are falling, but “falling” is relative. A home that costs $1 million is still almost impossible to secure for the average renter trying to break into the market. The ratio of home price to income has improved from the peak seen during the pandemic boom, but it remains historically stretched.

The GTA recorded 3,697 sales in December 2025, a 10.1% increase from last year. Active listings of 17,005 are still 10.5% higher than they were a year earlier. With active listings sitting nearly five times higher than monthly sales, the GTA had 4.6 months of supply in December 2025, placing the market within the 3 to 5 months typically associated with balanced conditions.

The more notable shift came from supply: new listings fell to just 5,299, down 52% from November 2025, marking one of the steepest monthly declines of the year. New listings typically decline heading into December due to seasonality, and new listings are also up 13% year-over-year. The GTA’s sales-to-new-listings ratio (SNLR) of 70% for December 2025 is close to December 2024’s SNLR of 72%.

While multiple Bank of Canada rate cuts throughout 2024 and 2025 have improved borrowing conditions, affordability challenges and a cooling labour market continue to constrain demand. This is where the GTA is stuck. There are more listings and softer pricing, but too few buyers are financially able to take advantage. Rate cuts haven’t solved the underlying issue: incomes simply haven’t kept up with home prices in Toronto.

Toronto & Ontario Rental Rates Have Softened

Toronto’s rental market continued easing in 2025

Consistent with our forecast, the proportion of vacant purpose-built rental apartments in the Greater Toronto Area (GTA) increased to 3%. This increase was driven by declining international migration, continued competition from condominium apartment rentals and a softening economic backdrop.

The newest structures maintained a vacancy rate well above the GTA average

Newer buildings continued to compete with rentals in the condominium segment, where elevated completions were recorded in 2024 and 2025. The vacancy rate in new projects built over the past 3 years was nearly 7%. Due to slow lease-up, 75% of structures completed since 2022 offered at least one incentive, with the most common being 1-2 months of free rent.

Unemployment and vacancies have historically risen together, including in 2025

Toronto’s unemployment rate increased in 2025, ranking as the third-highest among major metropolitan areas in October, according to Statistics Canada. The rate was significantly higher for youth aged 15 – 24, a group with the strongest tendency to rent. This likely reduced renter household formation.

The vacancy rate for rental condominium apartments increased but stayed low despite supply growth

At 1%, vacancy for rental condominium apartments remained well below the purpose-built average. A lower tolerance for vacancy risk among condominium investors saw them more willing to negotiate on rents to fill their units quickly.

Additionally, still-strained homeownership affordability and heightened economic uncertainty limited the movement of higher-income renters from condominium rentals into homeownership. This was confirmed by fewer existing home sales in 2025, especially at the entry level. Weakness in the for-sale market kept the share of investor-owned condominium apartments at a historic high (Table 4.3.1).

Lower turnover rents increased tenant mobility from record lows

In 2024, rental operators mostly offered incentives instead of lowering rents. By 2025, as competition grew, many began reducing rents. This was reflected in our data, where the average turnover rent — the rent charged on a new lease after a unit turnover — for a 2-bedroom unit declined by 2.5%.⁹

Lower turnover rents incentivized those who signed leases at peak rates a few years ago to explore other options. Increased tenant mobility was evidenced by turnover moving off its record low of 6.4% to 8.5% in 2025. Higher turnover was observed across bedroom types, building ages and sub-regions, pointing to more favourable market conditions for tenants (Tables 1.1.6 and 1.2.3).

Meanwhile, non-turnover, or in-place, 2-bedroom rents were largely stagnant. This reflected operators’ efforts to retain tenants in a softening market.

Rental supply to grow further, especially in the suburbs

After exceptional growth in 2024, the GTA’s purpose-built rental supply expanded minimally in 2025, increasing by just +0.4%. However, above-average growth is expected again, with a record number of rental apartments under construction in Q3 of 2025.

York Region, which has the smallest rental stock and where the vacancy rate had persistently held below 2% until recently, is expected to see the fastest supply growth.

Affordability still a challenge

Rental affordability improved slightly in 2025 as turnover rents fell, non-turnover rents remained mostly flat and incomes rose. However, years of declining affordability had an impact. This meant the average earner in the GTA still needed to spend a significant share of after-tax income — 42% — to rent a vacant 1-bedroom unit (Table 1.1.9). Two-thirds of a minimum wage earner's disposable income was required to rent a vacant studio apartment.

Hamilton Rental Vacancy Increasing

Vacancy rate increased

The vacancy rate in the Hamilton CMA rose to 3.6% in 2025, which was above our forecast and the highest level since the COVID-19 pandemic. The main reasons were the continued outflow of international students and an increase in condominium apartment rental supply.

Weaker student demand was evident in Zones 5 and 6 (West End and Mountain, respectively), where McMaster University and Mohawk College students typically rent. These areas saw higher vacancy rates. In contrast, zones with fewer student renters tended to have a smaller proportion of vacant units.

Purpose-built rental supply expected to grow

Hamilton’s purpose-built rental supply remained mostly unchanged in 2025. However, a near record-high number of rental units were under construction in Q3 of 2025 (1,337 units), indicating strong future growth.

In 2025, most rental supply growth came from the condominium segment. The number of condominium rental apartments in Hamilton increased . The share of condominium apartments being rented out stayed at a record high due to continued weakness in the for-sale market.

Zone 1 (Downtown) saw a high number of condominium apartment completions, creating strong competition for newer purpose-built rentals in the area. As a result, the vacancy rate in this sub-market was above the CMA average

Turnover rents stalled

The average rent for 2-bedroom same-sample units increased slightly, mainly due to repricing after tenant turnover. However, in weaker market conditions, the average turnover rent for 2-bedroom units (the rent charged on a new lease for a vacated unit) showed little change. Similarly, rents for non-turnover units (units with existing tenants) remained stagnant.

Tenants had more options in 2025

In 2025, more supply became available in the second and third rental quartiles, while the vacancy rate for the fourth quartile remained high. The availability of units at different price points likely encouraged more tenant movement along the rental continuum. This was reflected in higher turnover across different rental segments

Kitchener – Cambridge – Waterloo

The vacancy rate was stable

The vacancy rate in Kitchener – Cambridge – Waterloo stayed the same in 2025, holding at a multi-decade high. However, this overall average masked important shifts between sub-markets.

The federal cap on international study permits continued to ease demand in areas with large student populations. This was clear in Zone 4 (Waterloo), home to the University of Waterloo and Wilfrid Laurier University, where the vacancy rate increased Zone 3 (Kitchener West), where supply growth was above the CMA average, was the only other sub-region with a higher vacancy rate.

Economic weakness also reduced rental demand across the CMA. Kitchener – Cambridge – Waterloo has one of Ontario’s most tariff-exposed economies, with many workers employed in motor vehicles and parts manufacturing.

Lower vacancy rates for high-end units helped stabilize overall rental market conditions. This was likely due to landlords offering significant incentives, such as 1 – 2 months of free rent, to lease these units more quickly.

Supply expanded but skewed toward the high-end

Rental apartment supply in Kitchener – Cambridge – Waterloo grew by 2.8% in 2025, with increases seen across the region. However, most new units entering the market were not attainable to lower-income renters. As a result, while renters had more choices, affordability remained a key challenge for this group. This was highlighted by a vacancy rate under 1% for the least expensive units.

Supply growth did, however, help middle-income renters move up the rental property ladder, freeing up units priced at the mid- and upper-mid range. This was reflected by higher vacancy rates in the second and third rental quartiles and an overall higher turnover rate.

Turnover rent growth stalled

The average rent for 2-bedroom same-sample units increased, largely due to units being repriced after tenant turnover. However, with the vacancy rate still high, the average rent for a 2-bedroom turnover unit — the rent charged on a new lease for a vacated unit — was little changed.

To retain sitting tenants, especially those that signed leases at peak rates in 2021 – 2023, the average same-sample non-turnover rent for 2-bedroom units was also stagnant.

London

Highest vacancy rate since 2010

At 4%, the vacancy rate for purpose-built rental apartments in the London CMA rose to its highest level in 15 years. The main reasons were a decline in international migration, a softening economy and record-high supply increases. Although we expected market conditions to ease, weaker-than-expected demand pushed the vacancy rate above our forecast.

London’s rental market had been supported by international student demand for much of the last decade. Over the past 2 years, a sharp drop in enrolment led to higher vacancy rates in Zone 4 (Northwest) . This area is home to Western University. The vacancy rate also stayed high in Zone 2 (Northeast), where Fanshawe College is located.

Our market intelligence also linked the rise in the region’s vacancy rate to these demand-side factors:

• Non-permanent residents whose work permits expired and were not renewed.

• Labour market weakness in the tariff-impacted manufacturing and transportation sectors.

Rental completions posted another record high in 2025

London’s purpose-built rental apartment supply grew by 2.1% in 2025. Most unit types and sub-regions saw increases in supply. This growth was driven by strong rental apartment completions, with 2,585 units completed between January and September 2025. This surpassed the record set in 2024.

Turnover rents fell

The average rent for 2-bedroom units in the same sample increased, mainly due to repricing after tenant turnover. However, in line with a softer market, the average turnover rent for 2-bedroom units decreased slightly in 2025. Turnover rent refers to the rent charged on a new lease for a vacated unit.

Tenants were more willing to move

Softer market conditions made it easier for low-to-middle income renters to move. This was reflected by higher vacancy rates in the least expensive rentals (the first and second rent quartiles). Turnover also increased in older, less expensive buildings. However, the available supply of lower-priced options remained below the CMA average.

Ottawa

Vacancy rate rose slightly in 2025

In 2025, the Ottawa-area rental market eased slightly (Table 1.1.1).  The increase in the vacancy rate aligned with our forecast and was partly caused by an increase in new completions, along with a slowdown in demand. Vacancy rates were highest for newer units, reaching 6.7% for units built after 2015. This was more than twice the average vacancy rate in Ottawa (3%)

Demand for rentals slowed down partly because fewer international migrants, particularly students, came to the area. The number of non-permanent residents fell sharply in Ontario. This was probably also true in Ottawa. Additionally, the higher unemployment rate in the CMA this year may have slowed rental demand.

In some areas, including Sandy Hill/Lowertown, which is a university neighbourhood, had more available units than elsewhere. This trend was also seen in Downtown, Glebe/Old Ottawa South, Alta Vista and Gloucester North / Orleans .

Despite market easing, affordability continued to decline

The growth in rental supply in 2025 mainly came from newly built units, which are typically more expensive. Affordable units with lower rents remain scarce, with very low vacancy rates.

• High demand for low-rent units: Units in the lowest rent quartile (the first quartile of rents) have low and stable vacancy rates below 1%.

• Rising vacancy for higher-rent units: Vacancy rates are increasing for units in the second, third and fourth rent quartiles.  

The growing gap between rent increases and wage increases is worsening the decline in affordability.  As a result, some tenants have had to stay in their units longer than they would’ve liked. This led to historically low turnover rates, except in some areas.

• Sandy Hill/Lowertown: This university area has been considerably affected by the decline in the number of international students. The decrease in the number of these students has freed up many units, including studio and 1-bedroom apartments.

• Increased supply in other areas: Rental housing supply has increased in areas like Chinatown, Westboro North and Hintonburg. Turnover rates in these areas also increased.

Rent growth slowed 

Unlike the Quebec portion of the CMA (Gatineau), Ottawa saw slower rent growth (Canada, Table 1.0). It reached 3.4%, after an increase of nearly 5% in 2024. This lower growth reflects softer market conditions. It’s also related to the permitted increase of 2.5% for units built before 2019 that haven’t turned over to new tenants.

About two thirds of this rent growth comes from units that turned over to new tenants. The remaining third came from occupied units without turnover. This highlights how turnover drives rent growth, especially when housing mobility is low.

Rent increases were much higher for households that moved. For 2-bedroom units that turned over to new tenants, rent growth was over 5 times the average rate. In general, vacant units were 13% more expensive than occupied units. The rent gap was slightly higher for units with 2 or more bedrooms (17%), which are in high demand.

This rent gap has reduced housing mobility, keeping turnover rates historically low. Low mobility has added pressure on the supply of affordable housing, despite the slight easing of the market.

Rental condominium apartment market remained tight

Vacancy rates in Ottawa’s rental condominium apartment market stayed low and stable. These units remain the most expensive type of rental housing, with rents similar to newly built units. For a 2-bedroom condominium apartment, rents were almost 30% higher than those for purpose-built rental units.

Despite their high rents, vacancy rates for rental condominium apartments were lower than in the conventional rental market.  Rental condominium apartments account for nearly 15% of the CMA’s rental universe, offering an additional housing option for Ottawa renters. 

The rental condominium apartment supply grew by 10%, exceeding that of conventional rental units (4.7%). Weakness in the resale market for newly built condominium apartments led many units initially intended for resale to be rented instead. A similar trend was observed in Canada’s other main urban markets.

St. Catharines – Niagara

Vacancy rate steady in 2025

The average vacancy rate in the St. Catharines – Niagara CMA remained at 3.9%, similar to last year. This rate is at a more-than-decade high and aligns with our forecast. Most sub-regions, except Niagara Falls (Zones 4-5), had stable market conditions.

The higher vacancy rate in Niagara Falls was due to several factors:

• A decline in work permit holders, as many permits expired and were not renewed. The region relies heavily on temporary foreign workers in agriculture, tourism and hospitality.

• A weaker labour market partly caused by tariff-related impacts, especially in the transportation, warehousing and tourism sectors.

• A 1.8% increase in rental supply .

Conditions in Zone 1 (St. Catharines – Core), remained stable, even with strong rental supply growth (8.4%). This highlights the desirability of the area, following significant investments in downtown revitalization in recent years.

Turnover rents were largely unchanged

The average rent for 2-bedroom same-sample units increased, mainly due to repricing after tenant turnover (Canada Table 6.1). However, with the vacancy rate still high, average turnover rents — rents for new leases on vacated units — remained stable across most unit types .

Non-turnover rents — rents for tenants staying in their units — increased. Most long-term tenants in St. Catharines – Niagara, including many older renters, chose to stay in their units and accept the rent increase rather than move.

The premium to move — measured by the average difference between 2-bedroom turnover and non-turnover rents — remained largely unchanged from the previous year at 27%. This stability helped keep the turnover rate steady in 2025 .

Vacancy rate steady in 2025

The average vacancy rate in the St. Catharines – Niagara CMA remained at 3.9%, similar to last year. This rate is at a more-than-decade high and aligns with our forecast. Most sub-regions, except Niagara Falls (Zones 4-5), had stable market conditions. The higher vacancy rate in Niagara Falls was due to several factors:

• A decline in work permit holders, as many permits expired and were not renewed. The region relies heavily on temporary foreign workers in agriculture, tourism and hospitality.

• A weaker labour market partly caused by tariff-related impacts, especially in the transportation, warehousing and tourism sectors.

• A 1.8% increase in rental supply.

Conditions in Zone 1 (St. Catharines – Core), remained stable, even with strong rental supply growth (8.4%). This highlights the desirability of the area, following significant investments in downtown revitalization in recent years.

Turnover rents were largely unchanged

The average rent for 2-bedroom same-sample units increased, mainly due to repricing after tenant turnover. However, with the vacancy rate still high, average turnover rents — rents for new leases on vacated units — remained stable across most unit types.

Non-turnover rents — rents for tenants staying in their units — increased. Most long-term tenants in St. Catharines – Niagara, including many older renters, chose to stay in their units and accept the rent increase rather than move.

The premium to move — measured by the average difference between 2-bedroom turnover and non-turnover rents — remained largely unchanged from the previous year at 27%. This stability helped keep the turnover rate steady in 2025 .

Windsor

Vacancy rate stayed high

In 2025, the average vacancy rate for purpose-built rental apartments in the Windsor CMA remained high at 3.7%. This was higher than the Ontario and national averages.. Declining international migration and tariff-related challenges kept market conditions soft.

Fewer international students and temporary foreign workers

For the second year in a row, the number of international students renting in the CMA decreased due to the ongoing federal cap. Rental operators also noted that many temporary foreign workers in the region didn’t have their permits renewed. A high concentration of Windsor's labour force is employed in manufacturing, construction, agriculture, and accommodation and food services; sectors that commonly rely on temporary foreign workers.

Tariff headwinds

Economic pressures from tariffs also weakened demand. According to our market intelligence, many laid-off workers moved to provinces like Alberta for better employment opportunities. In October 2025, Windsor’s unemployment rate was 10.1%, the highest among the country's metropolitan areas, according to Statistics Canada.

Supply grew in suburban communities

The region’s rental stock grew by 3.6% in 2025. Suburban Zones 5 and 6 (Amherstburg and North Essex County, respectively) continued to have the strongest rates of supply growth, similar to 2024. These areas, some of which have amenity-rich beachside communities, may attract downsizing senior households.

Zone 3 (East Outer), which contains the popular Forest Glade neighbourhood, had the largest number of new units. The steady vacancy rate in this suburb shows that newer, more expensive rental supply was quickly absorbed. This likely reflects demand from a subset of renters who were less impacted by recent economic developments.

Turnover rents unchanged

In 2025, the average same-sample rent for 2-bedroom units increased, likely due to repricing after tenant turnover. However, in the Windsor CMA, soft market conditions kept average turnover rents — the rents charged on new leases for vacated units — mostly unchanged.