Canadian Rents: A race to the bottom
A "Race to the Bottom"
Real estate experts are seeing a major reversal in the market. Average asking rents across Canada fell by 3.1% in 2025 and are down 5.4% from two years ago. In major cities, the December year-over-year drops were even more pronounced:
-
Vancouver: -8%
-
Toronto & Calgary: -5%
-
Montreal: -2%
Why the Market is Shifting
Several factors have converged to create this tenant-friendly environment:
-
Record Supply: 2025 was the second consecutive year of record rental housing starts. As these projects wrap up in 2026, the market is being flooded with new apartment completions.
-
Immigration Caps: Federal government caps on immigration have slowed population growth, reducing the immediate pool of new renters.
-
High Vacancy Rates: The national vacancy rate for purpose-built rentals rose to 3.1% in late 2024, up from 2.2% the previous year, giving renters more options.
-
Buying Hesitancy: While some people are renting because they can't afford to buy, others are choosing to rent short-term while they wait for sales prices and interest rates to stabilize further.
Landlord Incentives Are Back
To fill units, landlords are no longer just lowering prices; they are offering "move-in incentives" that were common before the pandemic, such as:
-
Free parking and waived pet fees.
-
Moving allowances and gift cards.
-
Signing bonuses and even Aeroplan points or free Wi-Fi.
The "New Normal" for Renters
For the first time in years, renters have the "freedom to pick and choose." Instead of settling for whatever is available, tenants are now prioritizing location and amenities. Many are also looking to lock into rent-controlled units while prices are at these lower levels.
The Reality Check
While the trend is positive for tenants, "affordability" remains a relative term. Despite the recent dips, the national average asking rent (approx. $2,060) is still nearly 3% higher than it was three years ago. Many low-to-middle-income earners still find the current rates a significant financial burden.
Outlook for 2026
Economists, including those from the CMHC, believe 2026 will continue to be a "renter-friendly" year. With more supply on the way, the market expects to see continued price stability, giving local incomes a chance to finally catch up to the rent growth of previous years.
