Toronto’s Housing Market Struggles to Balance Growth, Affordability

TORONTO, Canada — In Canada’s largest city, where the skyline is marked by glass towers and constant construction cranes, the search for affordable housing has become a defining challenge. Toronto, a magnet for immigrants, students and workers, is both an economic powerhouse and one of the world’s most expensive housing markets. For many, the promise of proximity to jobs, schools and amenities has come at a prohibitive cost.

Toronto’s skyline reflects the city’s role as Canada’s economic hub — and serves as the backdrop to a housing market where demand continues to outpace affordability. (Photo: R.M. Nunes)

Toronto’s property market remains among the least affordable in North America. According to the Toronto Regional Real Estate Board, the average home price stood at C$1.16 million in July 2025, up slightly from a year earlier despite cooling measures. Condo apartments, long viewed as a more accessible entry point, averaged more than C$730,000. Renters have fared little better: average monthly rent for a one-bedroom apartment surpassed C$2,600 this summer, with two-bedroom units close to C$3,400.

A City Under Pressure

Several forces drive these conditions. Strong population growth — fuelled largely by immigration — has outpaced housing supply for more than a decade. Statistics Canada reports that the Greater Toronto Area welcomed nearly 500,000 newcomers between 2021 and 2024, a surge that intensified demand for both ownership and rental housing.

At the same time, high interest rates, introduced by the Bank of Canada in 2022 to curb inflation, slowed new construction. Developers paused or cancelled projects as borrowing costs rose and labour shortages worsened. The result: a growing mismatch between demand and supply.

“Toronto’s housing market is a pressure cooker,” said John Pasalis, president of Realosophy Realty. “We have record levels of demand colliding with an under-supplied housing system. That combination guarantees affordability will remain a challenge.”

Efforts to Make Housing Accessible

The City of Toronto has taken steps in recent years to ease affordability pressures, though progress has been uneven. In 2018, the city launched its 10-year HousingTO 2020–2030 Action Plan, committing to create 40,000 new affordable rental homes, including 18,000 supportive housing units.

Through its flagship Housing Now programme, Toronto has sought to leverage surplus public land for mixed-income communities. The initiative aims to deliver more than 17,000 homes on 21 sites, with at least a third designated as affordable. Construction has begun on several parcels, though critics note delays and rising costs.

The city has also rolled out a rental replacement policy to protect tenants when older buildings are redeveloped, and a multi-tenant housing framework to bring informal rooming houses into the regulated system. Both measures seek to preserve low-cost rental stock that often vanishes during redevelopment.

Mayor Olivia Chow, elected in 2023 on a platform emphasising affordability, has pledged to expand these programmes. “Housing is a human right,” Chow said earlier this year. “Toronto cannot thrive if its workers, students and families are pushed to the margins by rising rents and home prices.”

Mixed Results on Affordability

Despite these measures, affordability indicators show limited improvement. A 2025 report from the Canadian Centre for Policy Alternatives ranked Toronto the country’s most expensive city for renters, with nearly half of tenant households spending more than 30 per cent of income on shelter — the threshold commonly used to define affordability.

The report found that for a minimum-wage worker, affording a one-bedroom apartment would require 79 hours of labour per week. For many, the only options are shared housing, long commutes or leaving the city altogether.

Some progress has been visible at the margins. More than 6,000 affordable units have been approved under Housing Now, and nonprofit providers such as Habitat for Humanity and the Co-operative Housing Federation of Canada have expanded their footprint in the city. Yet with waiting lists for subsidised housing exceeding 80,000 households, the gap between need and availability remains wide.

Provincial and Federal Involvement

Toronto has not been alone in responding to the housing crunch. The provincial and federal governments have introduced complementary measures, including the Canada Housing Benefit, which provides direct rental support to low-income households, and the federal Housing Accelerator Fund, designed to streamline approvals and unlock new supply.

Multiplexes are among the housing typologies being targeted by new provincial and federal initiatives. Ottawa’s Housing Accelerator Fund and Ontario’s pledge to build 1.5 million homes aim to expand supply, though critics warn coordination and delivery still lag behind demand. (Photo: Jamal Browne)

Ontario, meanwhile, passed the More Homes Built Faster Act in 2022, targeting the creation of 1.5 million homes across the province by 2031. Critics argue the law weakened environmental protections and municipal planning authority, but the province insists it is essential to boost supply.

The interplay between municipal ambition, provincial authority and federal funding has often slowed delivery. “There is no shortage of announcements,” said Ricardo Tranjan, senior researcher at the Canadian Centre for Policy Alternatives. “What we lack is speed and coordination. Housing outcomes on the ground are still falling short.”

What Comes Next

Looking ahead, Toronto plans to expand its use of modular housing — factory-built units that can be rapidly assembled — to house both working-class families and homeless residents. Pilot projects have shown promise, but scaling up requires stable funding.

The city has also pledged to increase incentives for nonprofit and co-operative housing, viewing these as more sustainable solutions than relying solely on the private market. Officials are exploring land trusts and public-private partnerships as additional tools.

For ordinary Torontonians, however, relief remains distant. Young professionals and service workers continue to grapple with rents that consume much of their income. Families weigh trade-offs between long commutes from suburbs and cramped urban living. Seniors face insecurity as fixed incomes collide with rising costs.

Economists warn that without significant gains in supply, affordability will worsen as the population grows. The federal government projects the Toronto region will add another 1.2 million people by 2035, intensifying pressure on an already strained market.

A Test for Urban Resilience

Toronto’s struggle reflects a broader challenge facing global cities: balancing economic growth with social equity. As cranes dot the skyline and neighbourhoods gentrify, the question of who gets to live in Canada’s economic hub remains pressing.

“Cities succeed when they are inclusive,” Chow said at a housing summit in July. “Toronto must be a place where workers can live near their jobs, where families can afford a home, and where no one is left behind.”

Whether the city can achieve that vision depends on how quickly policies translate into homes people can afford. For now, the promise of proximity and convenience in Toronto continues to collide with the hard reality of cost.