Toronto's one-bedroom rents fell 12% year-over-year, the largest drop among all Canadian cities
Canada’s rental market cooled again in August, with Toronto and Vancouver seeing some of the biggest yearly rent drops, according to a new Zumper report. This marked the eleventh straight month of falling rents across the country, as more supply and weaker demand continued to ease prices.
Toronto’s one-bedroom rents fell 12% year over year, the largest drop among all Canadian cities, bringing prices back to levels last seen in fall 2022. Two-bedroom rents in the city also declined by 12.5% annually, now averaging $2,800.
Vancouver, long the country’s most expensive rental market, saw one-bedroom rents remain stable at $2,500 but still posted a 7.1% annual decline. Two-bedroom units in Vancouver dropped 9.2% year over year to $3,450.
Montreal climbed into the top 10 most expensive cities, with one-bedroom rents up 1.8% month over month to $1,740, while Kitchener slipped out of the top 10, falling to 13th place after a 9.5% annual drop.
However, a report from the Canadian Centre for Policy Alternatives found that renters in Toronto and Vancouver need to make more than $78,000 a year for a typical one-bedroom apartment to be affordable. Meanwhile, the Ontario Real Estate Association (OREA) has previously called for a comprehensive overhaul of rental policies and a renewed focus on supply now that the province's rental housing system "is broken."
"Ontario needs a rental market that is fair, efficient, and keeps the door to homeownership open to everyone who wants to achieve that dream,” OREA President Cathy Polan said. “That means we need more accessible and affordable supply across the housing spectrum so families of every size can find a great place to thrive. Improving Ontario’s rental landscape to make housing more affordable is a key step towards that goal."
Broader market trends
Across Canada, no major market posted significant annual rent growth. The highest increase was in Saskatoon, where one-bedroom rents rose just 2.4%.
Nationally, Zumper’s index showed median one-bedroom rents dipped 0.1% last month to $1,820, while two-bedrooms edged up 0.6% to $2,256. On an annual basis, one and two-bedroom rents are down 4.2% and 3.5%, respectively. These figures reflect a sustained period of relief for renters, with the report noting that “unless demand resurges, through renewed immigration or housing policy changes, this downward trend looks likely to persist through the fall.”
The Zumper report reflects a Royal Bank of Canada (RBC) analysis that showed rents are now falling in more than half of Canada’s 40 Census Metropolitan Areas compared to a year ago. Other major markets showing significant declines include Kelowna with a $230 drop, Calgary down $170, Toronto falling $160, and Halifax decreasing $150 for two-bedroom units.
Potential for future shifts
While the current environment favors renters, some experts pointed to the potential impact of AI and tech sector growth on future demand. "Just as the Bay Area in California saw rents resurge when AI companies rapidly expanded and attracted new waves of talent, Canadian tech hubs like Toronto, Montreal, and Vancouver could experience similar pressure if AI innovation drives job growth and draws more high-earning workers to these markets," the report noted.
