Rents hit two-year lows as supply outpaces demand, but experts warn the trend may not last
Canada’s rental market continued its downward slide in September, with average asking rents dropping 3.2% year over year to $2,123, according to the latest National Rent Report from Rentals.ca and Urbanation.
This marks the 12th consecutive month of annual declines, a sharp reversal after three years of relentless rent hikes that followed the pandemic.
Canada’s renters are seeing the best affordability in two years, with Vancouver and Toronto rents now at their lowest levels in nearly four years. This shift has been driven by new rental supply outpacing demand, but experts warn the trend may not last as condo supply tightens and population and job growth pick up.
Affordability improves, but for how long?
The report highlighted that purpose-built apartment rents fell 2.1% to an average of $2,093, while condo rents dropped 3% to $2,226.
Houses and townhomes saw the steepest decline, down 5.5% to $2,178. One-bedroom rents posted the largest annual drop at 4.1% to $1,836, while three-bedroom units saw only a 1.3% decrease to $2,561.
The cooling trend was most pronounced in British Columbia and Alberta, both posting 5.5% annual declines. Ontario rents dipped 2.7%, while smaller drops were seen in Nova Scotia, Quebec, and Saskatchewan. Manitoba was the outlier, with a 2.6% increase.
Meanwhile, Quebec’s housing affordability crisis deepened this week as nearly 15,000 tenants and their supporters called for an immediate rent freeze, increasing pressure on the provincial government to respond to what advocates described as an “unprecedented” surge in rents.
Regional shifts and market outlook
Vancouver and Toronto, long Canada’s priciest rental markets, led the declines among major cities. Vancouver rents fell 8.2% to $2,776, while Toronto dropped 2.9% to $2,592. The report also noted that in Vancouver, average rents are now at a 41-month low.
Some secondary and suburban markets bucked the trend. Kingston posted a 19.9% annual rent increase, while select Greater Toronto Area communities such as Vaughan and North York saw modest month-over-month gains.
“There’s definitely going to be a higher [condo] vacancy simply because a lot of units are getting pushed onto the market. There’s still a very large amount of units under construction in the GTA," Canada Mortgage and Housing Corporation (CMHC) lead economist for the Toronto market Jordan Nanowski told Canadian Mortgage Professional.
“A good proportion of those are rental apartments and half of the condos in that segment will be rented out. So there’s still a lot of supply that’s going to get pushed through and put downward pressure on rents.”
Implications for mortgage brokers and the housing market
The rent downturn is largely tied to a surge in new apartment completions, a slowdown in non-permanent resident population growth, and a softer job market.
For mortgage professionals, the shift could mean more renters delaying homeownership decisions, potentially slowing first-time buyer activity but also easing affordability pressures that have dogged clients for years.
While the rental market’s cooling may offer short-term relief for clients, the underlying volatility in supply and demand means the landscape could shift quickly.
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