The crisis gripping the region's condo market shows no sign of slowing
A growing number of landlords are offering incentives to attract tenants in the Greater Toronto Hamilton Area (GTHA) as rental demand continues to cool, according to a new report by data and analytics company Urbanation.
The report, which delves into the GTHA’s Q2-2025 rental market performance, reveals that 65% of purpose-built rental buildings completed since 2000 are now offering perks to renters. This marks a significant increase from the 36% of buildings that offered incentives during the same quarter last year. The most common incentive reported was free rent, with 39% of projects offering up to 1.5 months and 24% offering two months.
Rents decrease, vacancy rises
The report indicates a slight year-over-year decrease in average rent. The overall average rent for units in purpose-built projects completed since 2000 was $4.06 per sq ft ($2,909 for 716 sq ft) in Q2-2025, a 0.8% decrease from the previous year. However, when accounting for incentives, the average rent drops to $3.56 per sq ft, representing a 6.4% annual decrease. This trend was more pronounced in the City of Toronto, where incentive-adjusted rents fell 7.2% annually, compared to a 4.7% decrease in the 905 Region.
Alongside the drop in rents, the vacancy rate for purpose-built rentals also saw an increase, climbing to 3.5% across the GTHA from 2.7% a year ago. The 905 Region experienced a more significant jump, with its vacancy rate rising to 4.0% from 2.8%.
Record high condo listings
In the secondary condo rental market, there was a record-high of 18,119 leases signed in Q2-2025, up 10% from last year. Despite the increase in leases, the number of condo rentals listed for rent also saw a substantial 13% annual growth, reaching an all-time high of 24,918 units. This surge in listings, which surpassed the previous record set during the peak of COVID-19 turnover, suggests that supply is outpacing demand. This has led to a decline in rents across all condo unit sizes, with studios seeing the most significant drop at 6.0% annually.
Outlook
Urbanation president Shaun Hildebrand noted that while the market is facing supply challenges from a high number of new completions, “strong underlying demand” has kept conditions “fairly balanced.”
“The decrease in rents over the past year reflect increased competitive pressures and population growth slowing from the 2022-2024 boom. While supply will remain high for the rest of the year, a drop in condo completions starting next year and a lack of grojwth in rental construction starts should soon lead to higher rents,” said Hildebrand.
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