Market Insight for October 30

Toronto is about to see a boom in new rental buildings, data shows

Toronto could be heading for a significant increase in new rental housing as the condo market continues to struggle, according to new data from the Canada Mortgage and Housing Corp. (CMHC).

The number of housing units with approved building permits but where construction has yet to begin rose by more than 30 per cent in September compared with the same month in 2025.

Jordan Nanowski, CMHC’s lead economist and spokesperson for the GTA housing market, said the year-over-year increase is largely the result of more rental apartment permits being issued in recent months.

In September 2026, there were 19,526 approved housing units awaiting construction across the Toronto Census Metropolitan Area (CMA), a broad region that includes the GTA. Of those, 14,153 were in the City of Toronto under the “apartment and other” category.

That compares with 14,766 units in the Toronto CMA in September 2025, representing a 32 per cent increase in just one year.

(Source: CMHC)

Nanowski said several factors are contributing to the shift toward rental housing, including the need for greater density to make projects financially viable, government incentives for rental development and the difficulty developers are facing in getting new condo projects underway.

Condo developers typically need to pre-sell 70 per cent of their units to secure financing and move ahead with construction. That has become increasingly difficult in the current market, where buyer demand has weakened and numerous projects have been cancelled.

Rental housing, meanwhile, has received government support through various incentives. Developers are also looking to maximize the number of units in their projects to make the numbers work.

However, a project being classified as not yet started doesn’t necessarily mean there has been no activity on the site. Alexandra Dinsmore, a spokesperson for the City of Toronto, explained that CMHC only considers construction to have started once concrete has been poured for the building’s entire footing. This generally coincides with the beginning of above-ground construction.

“Many of these developments may have already begun site preparation and below-grade construction activities such as shoring, geothermal drilling, excavation, foundation work and underground parking construction,” Dinsmore said.

The increase in rental projects reflects what Pauline Lierman, vice-president of market research for Ontario and Quebec at real estate analysis firm Zonda, is also seeing in the market.

One question is how much of this new rental supply will be made up of affordable units, she said. Under CMHC’s Apartment Construction Loan Program, a certain percentage of units must meet affordability requirements for projects to qualify for financing. Some Toronto developers are using the program.

Lierman also noted that purpose-built rental development is expanding beyond Toronto’s traditional urban core into communities such as Brampton and Richmond Hill. Townhouses are attracting more interest as well.

As these projects move through construction and are completed, more rental housing is expected to reach the market over the next several years, Lierman said.

Zonda has tracked more than 16,000 new purpose-built rental starts across the Greater Toronto Area so far this year, marking a 30-year high, she added.

“I would expect the number probably to inch towards 20,000 units,” she said.

At the same time, the condo market continues to deteriorate, with Lierman saying prices and activity in that sector are really starting to fall fast.

Although the increase in rental construction won’t replace the condo projects that have been lost, the roughly three-year timeline needed to complete these buildings means rental housing is likely to account for a significant share of the new supply coming to market in the near future.

“What it’s going to be is rental. It’s all rental,” she said.