Toronto Multifamily Market Report

Current dynamics reshaping market. Affordability tends to be associated with the homeownership market. While still a tailwind for Toronto multifamily demand, it is becoming an obstacle in the rental market as well. Wage growth has lagged rental inflation, making it challenging for new, higher-cost supply to be absorbed. Rental and condo construction – which often acts as a secondary source of rental supply – has also surged since 2017, with starts hitting all-time highs in 2023. This supply is now being delivered, and with renters’ budgets for newer builds strained and population levels flattening, market rebalancing is underway. As these evolving dynamics play into multifamily performance, construction starts will likely pull back even further from last year’s initial easement from elevated levels. While this can help clear the market, it will also hinder long-term affordability goals. Governments need to lower build costs amid these tough conditions in order to get much-needed supply built.