Toronto’s rental market is undergoing a significant shift, with average prices hitting a four-year low. This downturn is providing a rare advantage to tenants, offering increased negotiating power and a wider range of options. The trend, observed throughout January , marks a substantial change from the historically expensive rental landscape of the city.
According to a recent report by Rentals.ca and Urbanation, the average price for a one-bedroom apartment in Toronto fell to $2,183 in January, a 7.2 per cent decrease compared to the same period last year. Two-bedroom apartments have also seen a decline, with average rents reaching $2,801, down 8.6 per cent year-over-year. Nationally, asking rents have been declining for 16 consecutive months, with the Canadian average reaching a 31-month low of $2,057.
The primary driver behind this cooling market is a surge in housing supply. A wave of newly completed condominium projects is adding significant inventory to the rental pool. Simultaneously, demand appears to be softening, creating a dynamic where supply outstrips demand. As realtor Will Doyle explained, many investors who purchased condos during the construction phase several years ago are now opting to rent them out rather than sell, further contributing to the increased supply.
“A lot of investors who would have bought new construction condos, say four or five years ago. Now, it’s not really worth it for them to sell it. So, the alternative is to put it for rent. So, there’s just a big influx of new rental inventory,” Doyle said.
A decrease in immigration levels is also playing a role, reducing a key demographic traditionally driving rental demand. This combination of factors has fundamentally altered the power dynamic in Toronto’s rental market.
The shift in market conditions is translating into tangible benefits for renters. Tenants now have considerably more leverage to negotiate lease terms, including rent prices, free months of rent, included utilities, internet access, and more flexible lease durations. This represents a significant departure from the previously competitive market where renters often faced pressure to secure units quickly with limited room for negotiation.
“This is probably the best it’s been for tenants in Toronto in a very long time…The urgency is not there anymore. [It] used to be for tenants, where you have to rush and there’s no negotiating. So, now tenants can negotiate on the rent. Some people are getting a month free, or some utilities included. Like, I’ve seen some provide free internet for some of the condos,” Doyle said.
While the current market conditions favor renters, the question remains whether prices will continue to decline. Doyle suggests that there are no immediate signs of a reversal in the downward trend. However, he acknowledges that market dynamics can shift.
“There is a chance that the rent prices will continue to go down. Like, there’s no real signs right now that the prices are going to start turning around and going back up anytime soon,” Doyle said. “But if you’re looking to move anyways, there is a lot of opportunity to take advantage. So, if you can find a good place at a good rate, and you can negotiate the price down even further, then, I don’t see why not.”
The current situation presents a favorable opportunity for those already planning to move. The increased supply and reduced demand allow renters to secure more favorable terms and potentially save on housing costs. For those not immediately seeking a new residence, the market suggests that waiting may yield further benefits, although predicting future market movements with certainty remains challenging.
The broader economic context reveals that approximately 70 per cent of renters in Toronto were spending more than 30 per cent of their monthly income on rent as of Winter , according to a Renter Feedback Survey. This statistic underscores the financial strain many Toronto residents face, and the current decline in rental prices offers a welcome respite. The trend also highlights the sensitivity of the housing market to factors such as supply, demand, and economic conditions, and the potential for shifts that can significantly impact affordability for renters.
The average one-bedroom rent in downtown Toronto currently stands at $2,224, according to Liv Rent, a figure that, while still substantial, represents a decrease from the peak of $2,600 in October .
