If you were holding out hope for a rebound in the GTA condo market this year, you might be in for a disappointment.
According to a new report by Rishi Sondhi, economist at TD Economics, resale condo prices in the region are forecast to fall another 10 per cent in 2025—capping off a multi-year slump that’s already seen values sink since their 2023 peak. By year-end, Sondhi says prices could be down as much as 15 to 20 per cent from their high in the third quarter (Q3) of 2023.
“Demand conditions have weakened materially,” Sondhi notes, pushing TD to revise its already bearish forecast even further. And it’s not just prices under pressure. Sales are expected to stay muted this year, with activity near historic lows.
Even if that sounds like a dramatic downturn, the report points out that condo prices would still remain five to 10 per cent above pre-pandemic levels, despite this correction.
What’s weighing on the market?
Several factors are working against a recovery in condo prices.
First, population growth is slowing. After a period of record immigration, the federal government’s new, more restrictive policy has kicked in. “In the resale market, rents for the average one-bedroom apartment in the GTA fell by 5 (per cent) year-on-year in 2024 Q4,” the report says. With fewer people arriving, rents are dropping—and so is investor interest.
Investors have long been a key pillar of the GTA condo market, but the math just isn’t working anymore, Sondhi explains, adding “It’s also possible that the allure of achieving an acceptable ROI through rising condo prices has faded for investors, given the weak conditions that have prevailed for a few years, and the large deterioration in condo affordability.”
Affordability continues to be a growing problem. Between elevated interest rates and high prices relative to income, first-time buyers are still on the sidelines, and investors aren’t picking up the slack.
Economic uncertainty is another key factor. Trade tensions are making Canadians think twice about making major purchases. According to a recent Bank of Canada survey cited in the report, 25 per cent of respondents said trade tensions made them less likely to spend, compared to just 7 per cent who said it increased the likelihood.
The job market isn’t helping either. Full-time employment dipped in March, especially in economically sensitive sectors. TD is forecasting further “near-term job losses” with unemployment nudging up to around 7 per cent.
And while condo completions are expected to fall significantly in 2025 (they were down 17 per cent in the first quarter), the overall supply is still relatively high. “As these units complete, listings will likely see some upward pressure as they did in 2024,” Sondhi explains.
Some relief ahead—but not a full rebound
Despite this gloomy outlook for 2025, TD expects things to start looking up in 2026. But don’t expect a rapid comeback.
A big part of the potential recovery hinges on interest rates. TD expects the Bank of Canada to cut its policy rate by another 50 basis points this year, bringing it to 2.25 per cent and holding it there through 2026. That should ease some affordability pressures and encourage more buyers to return to the market.
Sondhi also points to pent-up demand, improved economic conditions and easing trade tensions as reasons for cautious optimism next year. As uncertainty fades, buyer confidence could slowly improve.
On the supply side, the impact of reduced construction starts in late 2024 should start to show up in the form of fewer condo completions by 2026. That, in turn, could help balance the market.
Government policies may help—but not right away
The newly elected federal Liberal government is promising to boost housing supply, and Sondhi expects some of its measures may eventually help the condo sector.
Among the pledges: eliminating the GST for first-time buyers purchasing homes under $1-million, creating a new construction-focused agency called “Build Canada Homes,” and cutting development charges by 50 per cent—a move that could be especially impactful in high-cost areas like the GTA.
Still, Sondhi warns that most of these policies will take time to affect the market. “Lags inherent in the homebuilding process suggest that the bulk of this impact on condo construction could happen after 2026,” the report notes.
The bottom line
The GTA condo market is in for another tough year in 2025, with prices expected to fall further and sales remaining sluggish. Investor activity is slowing, affordability remains a challenge, and economic uncertainty continues to hang over the sector.
While 2026 may offer a glimmer of hope—thanks to lower interest rates, improved sentiment, and less supply pressure—any rebound is likely to be modest.
“The anticipated turnaround in hiring and economic activity will probably be gradual and moderate,” Sondhi cautions. And with population growth still restrained and condos losing some of their appeal as investment vehicles, it’s first-time homebuyers who may end up driving the next chapter of the market.
Jordana is the editor of Real Estate Magazine. You can reach her by email.