For a while rents have been sky-high in Canada, especially in cities. But prices have actually been crawling down in the past year or so. A decrease in rental rates is, of course, good news for tenants, who make up one-in-three Canadians and more than half of residents in the country’s urban centres. That compares with one-in-four who are renters throughout the OECD.
Average rents are down about $300 since last year in the Vancouver and Toronto regions. There are several reasons for the dip — including a decline in record population growth, almost all of which comes from international migration.
At the same time, several thousand purpose-built rental units are set to come onto the market this year in Vancouver and many more have been approved for construction. Still, the CMHC, a Crown corporation that finances housing, says the average rent for a two-bedroom unit in Metro Vancouver remains almost $2,500. In Greater Toronto it’s about $2,200.
Nothing is simple, however, when it comes to Canada’s big-city housing markets, among the most unaffordable in the world. While most welcome the easing of rents, some analysts point out the emphasis on rental units may be leading to fewer affordable homes being built for would-be owners.
Canadian mortgage lender Ron Butler says a high number of purpose-built rentals are coming down the pike because all three levels of government have been aggressively making it easier to build them. The number of available rental units is soaring in southern Ontario and growing in B.C. as well. And it’s going to increase. The growth of CMHC’s initiatives to develop purpose-built rentals has exploded apartment inventory in the last two years.
Rapid population growth has exacerbated (Canada’s) housing affordability challenges. Canada’s population grew six times faster in 2024 than the average among member nations, with almost one million newcomers. But now the CMHC reports that migration rates, of both permanent residents and especially temporary residents, are modestly declining at the same time many more rental units are being built, especially in B.C. and Ontario.
“Since 2024, rental supply has grown faster than new demand but affordability remains a challenge. We expect lower immigration and an increase in first-time homebuyers to continue to reduce rental demand throughout 2025 to 2027,” says the CMHC. “Supply will continue to expand as new rental units are completed, leading to higher vacancies and slower rent increases.”
As University of Waterloo economics professor Mikal Skuterud says, there are now about 3.1 million temporary residents in Canada, almost half of whom are foreign students. They make up 7.1 per cent of the population. The rate is highest in B.C., where they constitute 9.3 per cent of residents. Metro’s population has grown by 30 per cent in a decade.
But now the number of non-permanent residents — four of five of whom are renters — is slightly declining, reducing demand.
Due to reduced demand and other factors, Metro developers seem to have virtually stopped proposing new condo projects, even while some massive developments, like Quadreal’s Oakridge Park, are now nearing completion.
Meanwhile, despite population trends, the push to develop purpose-built rental buildings is feverish, fuelled by strong incentives from the CMHC, provincial governments and some municipalities.
In Vancouver, 1,400 new rental units are set to become available this year in one project, the three soaring towers called Senakw, which are being erected by Westbank and the Squamish First Nation on reserve land on the strength of a $1.4-billion low interest loan from the federal Liberals.
At Broadway and Granville streets, Vancouver city council also offered numerous concessions to encourage a 39-storey mostly rental highrise that is almost complete. And, taking advantage of incentives provided by Vancouver’s moderate income rental housing pilot program, another 1,500 units are near completion. Sites include Broadway and Birch, as well as Broadway and Alma, where Westbank’s Raven structure is located.
That’s not to mention how developers and speculators have proposed more than 120 new rental towers within Vancouver’s 500-block Broadway plan. That’s where the city is giving unprecedented density bonuses, and asking developers for few public amenities, if they build rental highrises containing a small proportion of “below-market” units. In total, Vancouver city council approved 5,587 new rental apartments in 2024. This year, a flood of extra units have already been OK’d and countless more are set for the green light.
Christina DeMarco, former head of planning at the Metro regional district, is among the many experts who are skeptical about some promised rental towers, given population growth is flattening, rents are softening and potential profits are shrinking.
