A record number of condominium completions in Toronto contributed to the market’s rent-growth slowdown in 2024, says the Canada Mortgage and Housing Corporation.

Toronto rent growth lagged behind all other Canadian major markets, CMHC said in its December national rental market report. While rental conditions remained tight nationwide, Toronto’s surge in new rental supply dampened rent increases and pushed vacancy rates higher.

CMHC reported that Toronto’s average rent growth for a two-bedroom purpose-built apartment was just 2.7% in 2024, a sharp drop from 8.8% in 2023. The flood of newly completed condo apartments entering the Greater Toronto Area rental market further contributed to the slowdown as investors opted to lease their units rather than sell amid softer resale market conditions.

The increase in available units, combined with the lowest tenant turnover rate among Canada’s major markets, led Toronto landlords to take a more cautious approach to rent hikes, prioritizing tenant retention instead, CMHC reported.

Toronto’s rent-growth slowdown contrasted with trends observed in Canada’s two other largest rental markets, Vancouver and Montreal, as well as the national average rent-growth rate of 5.4%. In Vancouver, rent growth was more resilient due to persistently strong demand and a slight increase in tenant turnover, preventing a decline as sharp as Toronto’s. Similarly, Montreal saw high rental completions pushing up vacancy rates, yet rent growth remained stronger than in Toronto.

Despite the slowdown in rent growth, access to homeownership in Toronto remained a challenge for renters. Declining entry-level home prices and lower mortgage rates did little to ease affordability concerns, as rising non-shelter costs made it harder for renters to save for a down payment and qualify for a mortgage, according to CMHC.

Toronto’s limited homeownership options have contributed to sustained rental demand, keeping vacancy rates from rising further, the report says.

Photo: Canadian Apartment Properties REIT