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Toronto Rents Drop: Vacancy Rate Hits 5-Year High
29 Apr
Summary
- New rental building vacancy in GTHA reached 5.4% in Q1 2026.
- Landlords offer incentives like free rent due to market softening.
- Advocate says despite vacancies, Toronto rents remain 'sky high'.
Rental unit vacancies in the Greater Toronto and Hamilton Area (GTHA) have reached a five-year high, with new rental buildings reporting a 5.4 percent vacancy rate in the first quarter of 2026. This marks a significant shift from historical averages, which have typically remained below two percent.
The rise in vacancies is a result of decreased population growth and challenging economic conditions, coupled with an increase in available rental units from newly completed condo projects. As a consequence, landlords are increasingly offering incentives, such as rent-free periods and cash bonuses, to attract tenants.
Despite the softening market and incentives reducing average rents by approximately 13 percent, advocates emphasize that rental costs remain extremely high. For instance, a one-bedroom unit at $2,500 is still considered unaffordable for individuals earning the average Canadian income.
Meanwhile, new purpose-built rental projects are progressing, with construction starts hitting a multi-decade high in the 12 months leading up to the end of the first quarter of 2026.
