Rent prices in Toronto are continuing to drop. Experts explain why

A for rent sign outside a home in Toronto on Tuesday July 12, 2022. THE CANADIAN PRESS/Cole Burston

The cost of rent in Toronto is continuing to drop.

The latest rental report from Rentals.ca and Urbanation revealed that Toronto’s rental prices hovered at an average monthly rate of $2,482 in February, reflecting a 5.3 per cent decline from the same time in 2025. It is also 11.7 per cent lower than what the city’s rental market saw in 2024, the report notes.

The city also saw the steepest declines across most dwelling types among Canada’s largest markets, according to the report, with studios dropping by 7.9 per cent, one-bedroom units by 6.9 per cent and two-bedroom units by 7.1 per cent.

Canada’s rental market is seeing one of the largest downturns in cost in recent history, and in the case of Toronto, one analyst says it is “hard to imagine” that prices will surge anytime soon.

“We usually expect that the summer rental season to pick up with demand and with that comes rental prices, but even last summer, we didn’t see Toronto rents increase. It actually went the other way around,” Giacomo Ladas, associate director of communications at Rentals.ca, said.

There is an influx of supply in Toronto, Ladas noted, pointing to a glut of new purpose-built rentals and condos entering the market.

“That’s what makes me believe that I don’t see demand picking up to the point where supply can match it throughout 2026 because there’s so much more supply,” Ladas said.

Ralph Fox, broker of record and co-founder of Fox Marin Associates, says supply and demand within a rental market swings like a pendulum.

“In the short term, we’ll probably see continued softness as a result of pressures on the economy and due to immigration and still a surge of supply coming online,” Fox said.

“But long term, as the pendulum starts to move, it’ll move back the other way, Overall, I think rents were getting out of whack relative to incomes so I think it’s a healthy breather and I think it does start to create an environment, especially for younger people, where they can start to save.”

Other cities outside of Toronto have also seen the cost of rent decline. Oakville, with a monthly average of $2,458 for a one-bedroom apartment, saw rent decrease by 4.1 per cent, and Burlington, with a monthly average of $2,356 for the same unit, saw a 4.5 per cent decline year-over-year.

Though there is a surplus of supply, Ladas says demand has declined, which has prompted a rise of rental incentives across newer buildings (from a couple of months of free rent or parking, or even Aeroplan points).

“On top of that, we are also seeing that the average square foot of a rental unit is decreasing, which I think also plays a factor into this,” Ladas added, noting how that square footage has dropped by 6.3 per cent to an average of 826-square-feet though the average rent per square foot has remained the same year-over-year.

While Ladas thinks the smaller units are playing a part for a lack of demand, Fox says his younger clients are more drawn to these rentals.

“There’s a bit of a misnomer about the sizes of spaces relative to functionality, layout and location, and I think there is a counterbalance to that and some of that is just basic affordability and the price of living in a big city,” he said.

“As long as they’re well constructed and they have great layouts, they can be really functional and enjoyable to live in.”

Younger renters are also scouring for buildings that offer rent-controlled units, Fox says, as a way of protecting themselves from costlier changes to their rent year-over-year.

While it’s challenging to forecast the future, if rental costs continue to fall, Ladas said the market could become more favourable for renters—particularly those drawn in by nicer amenities and hard-to-beat incentives.

“People who already have an apartment are now seeing that a building down their street, which is much newer, nicer, has condo-like amenities, is now $800 less than their current rent, and that means that they either will start negotiating with their landlords to decrease their asking rents—which landlords are going to be hesitant to do—or they’re just going to move,” Ladas said.