Supply is surging across many prominent urban markets. Is affordability improving?
Canada Mortgage and Housing Corporation (CMHC) has released its 2025 Mid-Year Rental Market Update, reporting a notable decline in advertised rents across several of the country’s largest urban centres in Q1 2025. The downward trend is largely attributed to a growing supply of rental units, aided by federal construction financing programs.
According to CMHC, advertised rents in Calgary, Toronto, Vancouver and Halifax fell between 2% and 8% year over year. Meanwhile, Edmonton, Ottawa, and Montréal posted continued annual rent increases, though at a slower pace than previous quarters. “Since October 2024, advertised rents are declining due to increased supply,” the report noted, “while rents for occupied dwellings continue to rise at a slower pace than a year ago.”
Government programs fuel supply growth
CMHC estimates that 88% of new purpose-built rental apartment starts in 2024 received financing or insurance through the Apartment Construction Loan Program (ACLP) and CMHC’s multi-unit mortgage loan insurance products. This represents a sharp increase from 5% in 2017, signalling an expanding role of federal initiatives in the housing sector.
“CMHC products and programs have played a key role in supporting rental supply across Canada,” the agency said, with cities like Montreal and Calgary benefiting from rapid uptake of financing tools such as the MLI Select program.
Job market, migration trends affect demand
The report also highlights slowing international migration and weaker labour markets as contributing factors to reduced rental demand, particularly in Vancouver, Toronto, and Halifax. With youth and graduate unemployment remaining above long-term averages, landlords are facing tougher leasing environments.
In some cities, landlords are offering incentives to attract tenants. “Vacant units are taking longer to lease,” CMHC observed, particularly in well-supplied areas of Toronto, Vancouver, and Calgary, leading operators to offer free rent or bonuses.
Affordability remains a concern
Despite easing rents and rising vacancies, affordability has not improved meaningfully. “Rental affordability isn’t improving – especially in Vancouver and Toronto as turnover rents are driving increases,” CMHC reported. In Toronto, the rent gap between occupied and vacant units reached 44% in 2024.
With rent-to-income ratios remaining high in major centres, the agency warned that financial stress on renters continues. Many households are now opting for shared accommodations or seeking larger multi-bedroom units as a cost-saving measure.
CMHC expects vacancy rates to rise further in 2025, though the agency stresses that continued investment in rental supply is essential to meet long-term population growth and affordability goals.
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