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Canada Rental Market Adjusts in 2025: Supply Grows, Rents Begin to Ease
Canada rental Market is shifting. After years of rent hikes and tight vacancies, early 2025 data shows signs of change. With more new units entering the market and demand cooling off, advertised rents are beginning to decline in some major cities. At the same time, landlords are offering incentives and adjusting expectations as competition increases.
But this isn’t a nationwide slowdown. Some cities are still seeing rental growth, just at a slower pace. While affordability pressures remain high, renters may finally see a bit of relief in the coming months. Let’s explore what’s really happening in the Canada rental market and what it means for tenants, landlords, and policymakers.
Canada’s Rental Market Advertised Rents Fall in High-Supply Cities
In the first quarter of 2025, advertised rents dropped in several large Census Metropolitan Areas (CMAs):
| City | Advertised Rent Change YoY |
| Calgary | ↓ 2% to 8% |
| Toronto | ↓ 2% to 8% |
| Vancouver | ↓ 2% to 8% |
| Halifax | ↓ 2% to 8% |
Meanwhile, Edmonton, Ottawa, and Montréal still reported annual rent increases, though the pace has slowed. Vacant units in many purpose-built rentals are sitting longer on the market, especially in cities with ample secondary rental supply (condos, basement units, etc.).
To compete, landlords are offering perks like:
- One month of free rent
- Moving allowances
- Signing bonuses
Some owners still anticipate needing to reduce rents further in the near future.
Construction Boom Driving Supply Growth
The increase in rental supply didn’t happen by chance. Canada Mortgage and Housing Corporation (CMHC) programs helped finance thousands of new builds through:
- Apartment Construction Loan Program (ACLP)
- Multi-unit Mortgage Loan Insurance (MLI Select)
Since 2017, over 200,000 new rental units have been supported by these tools. By 2024, nearly 88% of rental starts were funded using CMHC-backed programs.
| City | Notable Impact |
| Montréal | Strong MLI Select uptake in 2024 |
| Toronto/Vancouver | ACLP crucial for high-cost markets |
| Edmonton/Calgary | High per-capita insured units |
This large supply increase is easing upward pressure on rent, at least for now.
Migration & Labour Affect Rental Demand
Fewer new arrivals are also playing a role in the Canada rental market softening:
- Lower international migration levels since mid-2023
- Student permit caps in Ontario, BC, and Nova Scotia
- Youth unemployment above 5-year averages
Some markets like Halifax, Edmonton, and Calgary continue to benefit from full-time job growth. But Vancouver and Toronto are already seeing some labour market weakness, dampening new rental demand.
Rents Paid by Existing Tenants Still Rising
Despite the decline in advertised prices, many current tenants are still paying higher rents:
- Occupied 2-bedroom units cost more in 2025 vs. 2024 across all 7 major CMAs
- In Toronto, average rent at turnover was 44% higher than what previous tenants paid
- Edmonton, which has no rent control, saw just a 5% rent gap between vacant and occupied units
Older units are also catching up to newer builds in pricing, especially in places like Vancouver, where the gap between new and old 2-bedroom apartments was just 9% in 2024.
Turnover Rising, Vacancy Rates Set to Climb
Though turnover hit historic lows in 2024, signs now point to an increase:
- Tenants are more willing to move, encouraged by incentives
- Availability rates in new buildings, especially in Toronto, are outpacing vacancy rates
- Lease-up periods are growing longer for new developments
Combined with slower population growth and changing job markets, experts predict that vacancy rates will likely rise further throughout 2025—especially in Ontario.
Affordability Remains a Challenge for Most Renters
Even with softening rents, affordability remains strained. Here’s a look at rent-to-income ratios for 2-bedroom units in key cities:
| City | Rent-to-Income Ratio |
| Vancouver | Highest nationwide |
| Toronto | Second highest |
| Others | Similar range, but growing steadily |
More renters are:
- Sharing space in 3+ bedroom units
- Choosing older apartments to save money
- Delaying moves due to high turnover costs
What’s Ahead for the Canadian Rental Market
While some renters in high-supply cities are starting to see lower advertised prices, most Canadians still face rising costs, especially if they’re not moving. As more new units hit the market and demand slows, the Canadian rental market is shifting into a new phase of balance. However, long-term affordability is still far from solved.
Keep an eye on new supply, CMHC program updates, and government policies that affect student and migrant housing needs. And if you’re a renter or landlord trying to make sense of this shifting market, 2025 might just be the beginning of broader changes to come. For updates on housing and Canadian immigration news, follow Canada Immigration News!
