Rent and interest reductions did little to help the average GTA renter survive in 2025

Despite the rental market and overnight interest rate decreasing nationwide in 2025, GTA residents still hardly stand a chance, experts say.

Information relayed by Rentals.ca — a rental market watchdog— cited that the average asking price for a rental nationwide has decreased by roughly 3.4 percent, the most substantial dip in years.

Combine this with a decrease in national overnight interest rates, now at 2.25 per cent, and the expectation that the average renter in the GTA would be better off than ever would make sense.

However, take the terminal condition of the housing market, add a dash of tariffs and a sprinkle of an enduring cost-of-living crisis, and both economists and real estate experts point out that any continued single-digit movement on rent and interest rates is a small band-aid on economic bullet holes.

The Market

Data relayed by Zown, a Canadian real estate platform, has shown that nearly one-third of young Canadian renters are spending 50 per cent of their paychecks on rent payments, with prospects even more bleak for those living in the GTA.

“It is incredibly unfortunate what is happening in the market right now. Sure, you can say to an extent, inflation has cooled down, but then again, it only changing by slight percentages does nothing to change the macros of the cost of groceries, utilities and of course, rent,” Rishard Rameez, CEO of Zown, told INsauga.com.

Rameez continued to outline the roadmap for those managing the rental market in cities across southern Ontario, as a recent surge in return-to-office orders for both government and corporate workers impacts rentals in the downtown core in one of two ways.

In essence, those who can afford to opt for a downtown rental for an easier commute to the office will do so, potentially devouring viable affordable units, and those who can’t will be faced with the decision of leaving their current job or engaging in a potentially gruelling commute.

“They are now being forced to go back into the city, which is unfortunate, especially on top of what people are going through right now,” says Raemeez. “They have to manage all of the expenses of everyday living, and now they are being demanded to head into the city four to five times a week, which just adds either transit expenses or getting money together for a parking space.”

The average cost of living, for those coerced to return to their desks or otherwise, in reflection of the 3.4 per cent decrease in rent averages, does even less in contrast, according to Rameez. When crunching the numbers, Rameez took the average cost of a two-bedroom unit in the GTA — roughly $3,000 — and applied a general difference of a 3.4 per cent decrease in asking price, denoting a difference of only $90.

Over the last year, condo developers have been paying attention to the tide of those returning to the office and have implemented strategies to help them offload what has become one of Ontario’s most bloated property markets in history.

Specifically, by implementing free first month’s rent incentives and no down payment strategies to entice the young professional into small centralized condos. However, according to Rameez, this play is more out of desperation, as units continue to remain empty, with many opting out due to expense and uncertainty.

The Tenants

Amidst costs decreasing in inches, secondary concerns have shaken the foundation of renters in cities like Toronto, Mississauga, Brampton, and elsewhere.

Earlier this month, Doug Ford tabled a set of legislative changes that, if implemented, would have removed numerous protections renters have in the province.

In its initial form, Bill 60 would have overhauled the Residential Tenancies Act, primarily by changing current ”security of tenure” conditions, which would allow landlords to prematurely close leases, contrary to current provincial standards.

While the legislation was halted last month, those who champion renters’ rights in the province see this as another attempt to shake the already weak base of tenant protections throughout Ontario.

“This issue is more than just an issue of fixed-term leases, because we know from how it was presented, we know that it also attempted to bypass rent control protections. The Ford government has backpedalled on this, but we know that there are still a lot of other points in Bill 60 that impact tenant compensation,” Tanya Burkart, leader of the Peel branch for tenant activist organization ACORN, told INsauga.com.

ACORN, a force for tenant issues for the last two decades, has been monitoring the ebbs and flows of modern rental problems for as long as they have been around in the province.

Anything that can impact renters, such as a decrease in cost metrics or their ability to tackle debt, is not taken lightly by Burkart, and as a result, she was able to follow the thread of current shifts in the rental market to an alleged connection with the timing of Bill 60’s presentation.

“I don’t think the timing is random; more municipalities are seeing an increase in their unhoused populations, so if housing is allegedly becoming more affordable, why are we not seeing decreases?” says Burkart. “We’re seeing the opposite of that, despite this drop of 3.4 per cent, so it does not surprise me that Bill 60 came along when landlords are coming into looking at the conditions of their lease renewals.”

The Debt

2025 also showcased a decreasing trend in overnight interest rates, with the recent dip to 2.25 per cent occurring last month.

However — like the drop in asking costs for rent — does this give those maneuvering both cost of living and mounting debt a leg to stand on?

No, says one expert, who has taken it upon themselves to crunch the numbers and see just how much the average GTA resident needs to be making per month (on top of their paycheque) to make it in southern Ontario’s urban sprawl.

Erin Bury, CEO of the estate platform Wilful, found through a study conducted via her enterprise that the average GTA resident would need to make an additional $843.90 (a month) to manage their debt on top of other expenses.

As a result, 30 per cent of Ontario residents surveyed by Wilful admitted that, despite the decrease in interest rates, their debt remains unmanageable.

“Nearly 40 per cent of the people we talked to said that in reality, they are almost worse off now than they were last year,” Bury told INsauga.com. “When you put that into perspective, it’s not at all surprising, as half of the respondents also stated that tariffs have drastically impacted their ability to budget for everyday essentials.”

Additional findings revealed that nearly 60 per cent of all residents in the province have given up on significant financial milestones, including debt elimination, as day-to-day financial survival has taken precedence.

As far as the province stacks up to the rest of the country, in terms of extra cash required to get out of the red, the results, according to Bury, are little in the way of shocking.

Currently, the average Canadian needs roughly $791 extra dollars a month to manage debt.

B.C. shares Ontario’s standard of needing nearly $900 per month, while locations with lower living costs, such as Quebec, require only a little over $600, with Maritime residents requiring roughly $700.

“When we need countrywide, an average of $800 per month, just to get by, most people are forced to forget about any future financial plans. Whether that comes in the form of estate planning, trying to save, or paying off debt, most are being offered to put off any goals for the foreseeable future, which has a compound effect,” says Bury.

As for the current 2.25 per cent drop in interest, much like average rent costs, as long as it remains within the purview of decimal points, Bury notes that it means little to no lasting change.

“If you are managing a mortgage of say $100,000, that drop would represent a poultry change, roughly $20 in savings, per $1,000, per month.”

The Plan

Amid a mounting debt and affordability crisis, the Carney administration conveyed that it won’t sit on its hands, as evidenced by the newly announced 2025 federal budget.

Regarding the housing market, solutions involve a $15 billion resupply to the existing Apartment Construction Loan Program, introduced in the initial 2024 budget last year.

This program, on paper, was designed from the ground up to incentivize developers to build affordable rental units in areas like the GTA.

However, not all remain convinced that this is the silver bullet that will remedy the Canadian market.

Predictions from Viler Lika, CEO of SingleKey, a rental risk platform, suggest that even if this were to be executed perfectly over the next five years, its effects won’t be felt till years later.

“We are seeing a lot of focus on stimulating purpose-built rental construction, and that would be amazing to see continue to happen,” Lika told INsauga.com. “But all of a sudden, with these shifts in interest rates, it’s no longer feasible for investors. These rates are still way too high, and investors are realizing they aren’t making any money on these rentals.”

Lika went on to note that, despite the government’s intentions, condo values continue to depreciate in the GTA, further evidenced by major developments folding early, and completed ones trying to entice new renters and buyers with promotions.

In addition to the lack of incentive on the side of developers, even with the fresh top-up of $15 billion to go towards affordable units, Lika points out that if there is anything that will help the average Ontario renter or first-time homeowner faster, it’s a complete market cooldown.

“I think what everyone is waiting for is a rebalancing of most central economics. Construction costs need to go down so new development becomes easier, as it has gone up 800 per cent,” says Lika. “I think $15-billion will help reduce the cost to build, but the market has to support it.”

Even if a perfect economic ecosystem were to exist alongside the Apartment Construction Loan Program, Lika also notes that far too many developers have already left the GTA market due to stagnation.

“The problem is, there has been no appreciation; some of these investor-sold condos have seen the biggest drop in rental prices in the market. So a lot of them have pulled out of the market, especially since the end user (renter) really has no desire for the current slate of shoe box-sized condos.”

Lika notes that rental prices will likely see a steady decrease in the market; however, the catalyst for a healthy demand for renters and developers backing new affordable developments, according to him, depends on interest rates decreasing substantially by 2026.

Until then, it remains a waiting game for the average GTA renter, with Lika stating, “Will it be effective? I guess we’ll just have to see.”