Rent growth stalls in Canada’s apartment market, putting further pressure on landlords

Canada’s rental apartment sector moved further away from its frenzied pandemic-era conditions in the first quarter of 2026, as vacancies climbed past 5% and rent growth eased to its slowest pace in four years, according to Yardi’s latest Canadian National Multifamily Report.

The study showed the national vacancy rate rose to 5.1% in Q1 2026, the ninth straight quarterly increase.

In‑place rents averaged $1,761 and grew 2.7% year over year, down from the double‑digit gains seen earlier in the cycle.

New lease rents turned negative at ‑1.0% nationally, with eight of the 12 largest census metropolitan areas (CMAs) posting declines.

“Vacancy is rising, new lease rates are negative in most markets and the renter population is shrinking,” said Peter Altobelli, vice president and general manager at Yardi Canada Ltd.

“These are real signals that the market is shifting quickly, and the window for the industry to adapt is now. Those who lean into data, technology and AI will be best positioned to make smarter decisions on tenant retention and investment opportunities.”

Supply builds while demand cools

Yardi’s report pointed to a construction pipeline that remained robust even as immigration and household formation slowed.

In the 12 months ending November 2025, housing completions rose 22.3% to 171,000 units and apartment starts were up nearly 10% year over year, based on data from the Canada Mortgage and Housing Corporation (CMHC) and Common Sense Economics.

Ontario’s new federal‑provincial agreement, which included $8.8 billion over 10 years for housing‑enabling infrastructure, underlined that policy makers still viewed new rental as a priority.

“This new supply has contributed to the easing of rental market conditions in many of Canada’s major centres,” said CMHC deputy chief economist Tania Bourassa‑Ochoa in a recent CMHC report on rental construction.

“However, homeownership supply, particularly in the condominium segment, continued to face significant challenges in the face of falling presales,” she said.

Yardi’s Q4 2025 findings showed the vacancy rate at 4.5% and new lease growth at just 0.7%, signalling the turn in conditions that carried into 2026. “Canada’s rental market is entering a new chapter,” Altobelli said at the time.

Costs rise as operators recalibrate

The latest report also highlighted cost pressures: annual operating expenses averaged $8,053 per unit nationally, led by Ontario at $8,858 and Saskatchewan at $6,733 on the low end. 

Canada’s apartment market still faces structural undersupply in the long term, but the near‑term environment has become one of higher vacancies, slower rent growth and rising expenses.

Those who price deals, capital structures and exit strategies for this new phase, rather than the boom of recent years, stand the best chance of navigating the reset.

Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.