Canada’s housing market is witnessing a shift as advertised rents in key cities show signs of easing, attributed to factors like increased supply and slower immigration. However, despite this trend, renters are still facing challenges.
According to the latest mid-year rental market update by Canada Mortgage and Housing Corp. (CMHC), average rents for two-bedroom purpose-built apartments have decreased year-over-year in four out of seven markets. Vancouver saw the most significant drop at 4.9%, followed by Halifax at 4.2%, Toronto at 3.7%, and Calgary at 3.5%. In contrast, Edmonton experienced a 3.9% increase, Ottawa 2.1%, and Montreal 2% compared to the same period in the previous year.
Landlords are finding it challenging to lease vacant units, particularly in Toronto, Vancouver, and Calgary, where they face competition from well-supplied secondary rentals like condominiums and single-family homes. To attract new tenants, landlords are offering incentives such as one month of free rent, moving allowances, and signing bonuses. Some landlords anticipate the need to reduce rents in the coming years.
While rents for occupied units continue to rise, the pace has slowed compared to the previous year. The report highlights that higher turnover rents in major rental markets have led to decreased tenant mobility, resulting in longer average tenancy periods and more significant rent increases when tenants decide to move.
In Toronto, the gap between rental prices for vacant and occupied two-bedroom units reached 44% in 2024, the highest among major cities. Conversely, Edmonton had the smallest gap at around five percent. CMHC predicts an increase in vacancy rates in most major cities this year due to slower population growth and challenging job markets.
Despite the downward pressure on rent prices, CMHC notes that affordability has worsened over time, with rent-to-income ratios steadily increasing since 2020, especially in regions like Vancouver and Toronto. Another report released recently highlighted similar trends in the national rental market.
The latest monthly report from Rentals.ca and Urbanation revealed that asking rents for all residential properties in Canada declined by 2.7% year-over-year in June, reaching $2,125 on average. Although rents have decreased, they remain significantly higher compared to three and two years ago, indicating long-term inflationary pressure in the rental market.
In terms of specific property types, asking rents for purpose-built apartments decreased by 1.1% to an average of $2,098, while condo rents dropped by 4.9% to $2,207. Rents within houses and townhomes fell by 6.6% to $2,178.
Urbanation President Shaun Hildebrand noted that while rent decreases have been modest at the national level, the most substantial declines have been observed in major cities. However, there is a trend of softening rents spreading across various parts of the country.
Provinces like British Columbia and Alberta saw the largest declines in June, with asking rents dropping by 3.1% year-over-year in each province. Ontario followed with a 2.3% decrease, Manitoba with a 1.3% decrease, and Quebec with a 0.9% decrease. Nova Scotia saw a slight decrease, while Saskatchewan recorded a 4.2% growth in asking rents.
The data suggests that the rental market in Canada is undergoing adjustments, with varying impacts across different regions.
