Canada’s rental market has seen a significant price drop, reaching its lowest levels since July 2023. According to Rentals.ca and Urbanation Inc., the average rent has fallen by 4.8% year-on-year, now at CAD 2,088 ($1,458.50). This marks the steepest decline since April 2021, during the COVID-19 pandemic. Another rental platform, reported a similar trend, with rents for one-bedroom apartments down 2.4% to CAD 1,850 in February.
Toronto and Vancouver, typically the priciest rental markets in Canada, have also experienced drops in rent, partly due to a surge in newly constructed condominium units. Studio apartment rents in Vancouver and Toronto fell by 5% and 6%, respectively.
The decline in rental prices presents challenges for preconstruction buyers, with nearly 20,000 new condo units expected in 2025. These buyers face high closing costs and rental rates that may not cover their mortgage payments. The Canada Mortgage and Housing Corporation has pointed out that the government’s strategy to boost rental housing supply has led to an oversupply in some markets, contributing to the rent drop.
Another factor influencing the slowdown is the reduced number of international students. The Canadian government introduced visa restrictions in 2023, capping the number of student visas issued, resulting in fewer foreign students seeking housing. This policy shift has had a noticeable effect on rental demand, particularly in student-heavy areas.
With rental vacancies increasing and supply outpacing demand, experts predict a continued decline in rental prices across Canada’s largest cities.
