Rents Ease in Major Markets, Many Tenants Still Struggling

Canada’s housing agency reports that advertised rents in several major cities are starting to ease, driven by a combination of increased rental supply and slower population growth. However, many renters continue to feel the pressure of high housing costs despite these early signs of moderation.

In its mid-year rental market update released Tuesday, Canada Mortgage and Housing Corp. (CMHC) said average asking rents for two-bedroom purpose-built apartments were lower year-over-year in four of the seven major rental markets tracked. The agency’s findings reflect changes in market dynamics that vary by region and housing type.

Vancouver showed the largest year-over-year decline, with asking rents for two-bedroom purpose-built apartments down 4.9% in the first quarter of 2025. Halifax followed with a 4.2% decrease, Toronto fell by 3.7%, and Calgary declined by 3.5%. By contrast, some cities continued to see rent growth: Edmonton’s average asking rents rose 3.9%, Ottawa increased 2.1%, and Montreal edged up 2.0% compared with the first quarter of 2024.

Increased vacancy time for leasing units

CMHC noted that vacant units are taking longer to lease in many markets, particularly for new purpose-built rental buildings in Toronto, Vancouver and Calgary. Those newer units are competing with a well-supplied secondary rental market that includes condominium units and single-family homes, putting pressure on landlords to move more units into occupancy.

To attract tenants, many purpose-built rental operators are offering incentives such as a month of free rent, moving allowances and signing bonuses. The report says some landlords expect they may need to lower rents over the next couple of years if current market conditions persist.

While asking rents for vacant units have shown declines in certain cities, rents for occupied units continue to increase—albeit at a slower pace than a year ago. Higher turnover rents in several major markets have reduced tenant mobility, lengthening average tenancy periods. When tenants do move, landlords often apply more substantial rent increases on new leases, which contributes to ongoing affordability challenges.

The disparity between vacancy and occupied-unit rents is notable. In 2024, Toronto had the largest gap between the two measures for two-bedroom units, with a difference of about 44%, while Edmonton recorded the smallest gap, at roughly 5%.

Vacancy rates are expected to rise in major cities across Canada

CMHC expects vacancy rates to increase in most major Canadian cities this year as population growth slows and some job markets weaken. The agency warns that demand is struggling to keep pace with new rental supply, creating a market adjustment period across many regions.

The report highlights Ontario as an area where this adjustment may be more pronounced, citing lowered international migration targets and impacts near post-secondary institutions. CMHC also emphasizes that while supply may be abundant in the short term, it remains important to sustain the development of new rental units to meet projected future population growth and to improve affordability for existing households over time.

Despite recent downward pressure on advertised rents, CMHC notes that affordability has worsened over the past several years. Rent-to-income ratios have steadily increased since 2020 in many regions—especially in higher-cost cities such as Vancouver and Toronto—where turnover rents are a significant driver of rent growth.

A separate industry report released the same day painted a similar picture of national rental trends for the previous month, reinforcing CMHC’s findings about easing asking rents alongside persistent affordability challenges.

Residential asking rents falling across Canada

The latest monthly study from Rentals.ca and Urbanation found that asking rents for all residential property types in Canada fell 2.7% year-over-year in June, bringing the national average to $2,125. That marked the ninth consecutive month of annual declines in asking rents, though averages remain elevated compared with levels seen a few years earlier.

Even with recent declines, average asking rents were 11.9% higher than three years ago and 4.1% higher than two years ago, underscoring the longer-term inflationary pressure in the rental market. By property type, purpose-built apartment asking rents fell 1.1% year-over-year to an average of $2,098. Condominium asking rents dropped 4.9% to $2,207, while houses and townhomes saw a 6.6% decline to $2,178 on average.

Urbanation’s president noted that rent decreases have been mild nationally so far, with the most pronounced declines concentrated in the largest and most expensive cities. However, the softening trend appears to be spreading to other regions, suggesting a broader recalibration of rental pricing in response to supply and demand shifts.

Provincially, British Columbia and Alberta recorded the largest year-over-year decreases in June, both down 3.1%, to averages of $2,472 and $1,741 respectively. Ontario saw a 2.3% decline to $2,329, Manitoba fell 1.3% to $1,625, and Quebec edged down 0.9% to $1,960. Nova Scotia’s average asking rent was 0.1% lower at $2,268, while Saskatchewan was the only province to post year-over-year growth, up 4.2% to an average of $1,396.

Read more about renting:

• Rental income and taxes: What’s new for Canadian property owners in 2025
• When will rent costs in Canada stop increasing?
• Renting vs. owning: Can you be financially secure without buying a home?
• Why is rent so expensive in Canada?