Greater Toronto Area Real Estate Market Ranks #2 Among Canada’s Top-Performing Markets

Home-buying activity in the Greater Toronto Area (GTA) has ramped up in the second half of 2025, with the market expected to outperform the first half by year-end. The return-to-office mandate implemented by at least four of the big banks, as well as Rogers Communications, Canaccord Genuity and the Ontario Government sent both buyers and renters scrambling. August 1st proved to be the busiest rental day experienced in the last two years, with units snapped up in days and multiple offers reported.

The mandate proved instrumental in the upswing — a signal to investors who are finally gaining confidence. Units that have lingered on the market for months have started to move, absorption levels are increasing, and investors are slowly returning to take advantage of low downtown condominium values against a backdrop of growing demand.

The freehold market has been slower to mend, although lower price points in and around $1 million continue to experience healthy activity. A tentative recovery is underway, with all eyes on 2026.

Since 1994, average price in the GTA has risen 436.2 per cent — a 5.76-per-cent compounded annual rate of return over the 30-year period, marking the second-best performing city in the country. While prices have climbed, income for economic families with and without children rose just 34.6 per cent during the same period, rising from $97,300 in 1994 to $131,000 in 2023, according to Statistics Canada.

Confidence remains soft in GTA households, with the cost of living, economic uncertainty and concerns over future employment weighing on the overall market. To bolster consumer confidence, buyers and sellers would need to see the cost of living come down, coupled with further interest rate relief. The Bank of Canada continues to be hawkish on rate cuts, but there’s only so much that the market can bear.

Ontario is bleeding investment dollars, with buyers and investors now seeking opportunities in other provinces and countries. To stem the outflow, Ontario government agencies should be incentivizing younger first-time homebuyers with extended amortization periods and higher withdrawal limits on home-buying plans such as TFSAs and RRSPs, while lower development costs should be extended to builders who are creating more affordable housing and addressing the “missing middle.”

Population in the Toronto CMA topped 7.1 million in 2024, up almost 70 per cent from the 4.226 million reported in 1994. Between 2022 and 2024, the CMA welcomed more than 500,000 new residents. Yet, housing continues to lag population growth. A Scotia Global Economics Housing Note from May 2021 found Canada has the lowest number of housing units per 1,000 residents of any G7 country. The report stated the number of housing units per 1,000 Canadians has been falling since 2016, owing to the sharp rise in population growth. An extra 100,000 dwellings would have been required to keep the ratio of housing units to population stable since 2016 — leaving us still well below the G7 average. The current situation in Canadian housing markets primarily reflects a chronic insufficiency of home supply that is temporarily exacerbated by pandemic-related impacts linked to record-low mortgage rates and a shift in preferences for housing by type and geography. Past and proposed macroprudential measures are ineffective band-aids that do not address the underlying insufficiency of supply and are unlikely to ensure the long-term stability of Canada’s housing market.

Despite some progress made in terms of condominium and rental construction in recent years, the country continues to fall short of needed units. According to the Canada Mortgage and Housing Corporation’s (CMHC) latest Housing Shortages in Canada Report, which updated projected supply gaps using an enhanced model, it is estimated that housing starts must double from current levels to 430,000 to 480,000 per year to restore affordability over the next decade. Reality on the ground is that new supply is declining, and the construction industry is laying off thousands of workers. Home ownership, not surprisingly, continues to trend downward in the Toronto CMA after peaking at 68.3 in 2011. In 2021, 65.1 per cent of residents owned a home.

The Greater Toronto Area’s real estate market is experiencing a dynamic shift, driven by a combination of return-to-office mandates, investor confidence and population growth. The GTA condominium market has yet to show signs of recovery, while the freehold segment continues to see stronger activity. Overall conditions remain fragile with affordability challenges and supply constraints weighing on the market. The historical data underscores the significant rise in property values, compared with modest wage growth, highlighting the affordability challenge. To bolster market confidence, strategic interventions by government agencies are essential, including incentivizing first-time buyers and reducing development costs. As the region continues to grapple with housing supply shortages, the focus must remain on creating sustainable solutions to meet the growing demand. The road ahead is challenging, but with concerted efforts, the GTA can navigate these complexities and achieve a healthy balanced real estate market.