Toronto rent still unaffordable despite slower price growth: CMHC

Toronto’s rents remain unaffordable for many despite an easing growth in prices, according to a new mid-year housing market report.

Advertised rent prices have also declined since October 2024 due to an increased market supply, the report from Canada Mortgage and Housing Corporation (CMHC) said.

This is part of a trend that has seen Toronto-area landlords desperate to secure tenants, resorting to offering rent-free months, complimentary Wi-Fi and gift cards.

However, even with the easing rent growth and increased supply, affordability still isn’t improving in Canada’s major cities like Toronto and Vancouver, due to rising rent-to income ratios, according to the report.

Turnover rate has also contributed to higher rent prices, and the report said the drop in advertised rent prices has not translated into lower rents paid by tenants overall.

CMHC also said turnover rates from tenants have increased greatly since October last year, citing an uptick in vacancies as an incentive for tenants to move.

The average rent for occupied 2-bedroom units in Canada’s seven largest Census Metropolitan Areas were actually higher in the first quarter of 2025 than they were at the same time last year, according to Statistics Canada’s Labour Force Survey data in the report.

CMHC said this drives overall rent growth.

The number of vacant units is also expected to continue growing in the rental market over the rest of the year.

The report said the market could be influenced by slower population growth and changing employment conditions.

“As demand struggles to keep pace with new supply, the market will remain in a period of adjustment,” CMHC said.

This is particularly true in Ontario, said the report, as international migration targets have decreased, especially in areas close to post-secondary schools.

Less international migration and a “sluggish” labour market have contributed to lower demands, CMHC said. Both York University and Centennial College suspended numerous programs earlier this year amid a cap on international student enrolment.

CMHC also said that rent in older buildings is beginning to catch up with the prices of newer properties.

This leads to higher average rent prices, as when a tenant leaves and an older unit becomes available, it is priced closer to newly built supply, the report said.