In its mid-year rental market update released Tuesday, Canada Mortgage and Housing Corp. said average asking rents for a two-bedroom purpose-built apartment were down year-over-year in four of seven markets.
Vancouver led the way with a 4.9% decrease in the first quarter of 2025, followed by drops of 4.2% in Halifax, 3.7% in Toronto, and 3.5% in Calgary. Average asking rents grew 3.9% in Edmonton, 2.1% in Ottawa, and 2% in Montreal, compared with the first quarter of 2024.
Increased vacancy time for leasing units
Landlords reported that vacant units are taking longer to lease, CMHC said, especially for new purpose-built rental units in Toronto, Vancouver and Calgary, where they face competition from well-supplied secondary rentals such as condominium units and single-family homes.
“Purpose-built rental operators are responding to market conditions by offering incentives to new tenants such as one month of free rent, moving allowances and signing bonuses,” the report said, adding some landlords anticipate they may need to lower rents over the next couple of years.
The agency said rents for occupied units are continuing to rise but at a slower pace than a year ago. It said higher turnover rents in several major rental markets have decreased tenant mobility, leading to longer average tenancy periods and “more substantial” rent increases when tenants do move.
In 2024, the gap in rental prices between vacant and occupied two-bedroom units reached 44% in Toronto, the highest among major cities, while Edmonton had the smallest gap at roughly 5%.
Vacancy rates are expected to rise in major cities across Canada
Vacancy rates are expected to rise in most major cities this year amid slower population growth and sluggish job markets, CMHC said.
“As demand struggles to keep pace with new supply, the market will remain in a period of adjustment. This is particularly true in Ontario due to lowered international migration targets, especially in areas near post-secondary institutions,” the report stated.
