City secures a significant funding boost amid shifting market trends
The federal government has announced a $2.55-billion commitment in low-cost financing to support the construction of thousands of rental homes in Toronto, including more than a thousand designated as affordable housing.
According to a report from The Canadian Press, the financing will be provided through Ottawa’s Apartment Construction Loan Program and will be administered by the Canada Mortgage and Housing Corporation (CMHC). The initiative is expected to help build more than 4,800 rental units, with at least 1,075 of them classified as affordable.
In addition to the federal funding, the City of Toronto has pledged nearly $235 million in financial incentives, including relief from development charges, fees, and property taxes. City officials say this collaboration is expected to accelerate seven rental housing projects, all of which are expected to be under construction by the end of 2026. At least 20% of the units in these developments will be designated as affordable rental homes.
Toronto Mayor Olivia Chow described the agreement as a “landmark” initiative that will help eliminate barriers to housing construction and ensure long-term affordability.
Rental market trends
According to the Toronto Regional Real Estate Board’s (TRREB) Rental Market Report, rental demand remained high in the fourth quarter of 2024, with 11,058 rental transactions recorded, up 13.6% from 9,736 in Q4 2023.
The average rent for a one-bedroom condominium apartment declined to $2,424 in Q4 2024, while the average rent for a two-bedroom unit fell to $3,154.
Despite this recent dip, rental prices remain historically high, and demand is expected to persist as borrowing costs remain elevated. Experts predict that declining interest rates in 2025 may encourage some renters to consider homeownership.
Declining investor interest
The funding is also expected to help ease pressure on Toronto’s housing market, as fewer condominium apartments are projected to be built between 2025 and 2027 due to declining investor interest, according to CMHC-SCHL’s 2025 Housing Market Outlook.
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