Toronto condo market stalls as developers offer incentives and investors buy blocks for rentals

Rising rates and weaker investor returns have left many new GTA condos unsold, prompting developers to add incentives and large buyers to purchase units for rental conversion.

For over a decade the Greater Toronto Area relied on selling condos before construction to fuel growth, but higher interest rates and slimmer investor margins have created a record inventory of unsold units. Buyers now compare new-build prices—around $1,200 per square foot—to resale values just under $900, making the math unfavorable. Developers are countering with incentives ranging from cash-back offers to zero-closing-cost programs aimed at both end-users and investors.

At the same time, bulk purchasers such as Jesta Group intend to spend up to $500 million on more than 1,000 downtown units, and a joint initiative by the Building Ontario Fund and High Art Capital targets a $1.3-billion acquisition of blocks for affordable rentals. While this could add rental supply in a tight market, it also concentrates ownership and raises concerns about future entry-level homeownership. Industry observers suggest that government measures like HST relief and reduced development charges may be needed to restore balance.