A shift is occurring in Canada’s rental landscape. After years of relentless increases, the pace of rent growth is finally slowing, offering a glimmer of hope for renters across the country.
The average rent for a two-bedroom apartment rose 5.1 per cent this year, reaching $1,550. While still an increase, this is a noticeable deceleration compared to the 5.4 per cent jump seen last year, signaling a potential turning point in the market.
This easing of pressure isn’t simply about lower prices; it’s about increased availability. Vacancy rates for purpose-built rental apartments climbed to 3.1 per cent in October, a significant jump from 2.2 per cent the previous year and a stark contrast to the record low of 1.5 per cent in 2023.
A surge in new rental units, coupled with a slight slowdown in population and economic growth, is the primary driver behind this change. For the first time in a long time, supply is beginning to meet, and even slightly exceed, demand in many major cities.
Landlords are responding to the increased competition by offering incentives to attract tenants. Reports indicate a rise in deals like a month of free rent, moving allowances, and signing bonuses – tactics rarely seen in recent years.
However, the situation isn’t uniform across the country. While turnover rents – the cost when a new tenant moves in – rose 8.7 per cent nationally, this represents a dramatic slowdown from the 23.5 per cent increase observed the year before.
Toronto experienced a particularly notable shift, with purpose-built apartment vacancy rates reaching three per cent, a level not seen since before the pandemic. This rise is linked to declining immigration, reduced demand from international students, and broader economic uncertainty.
Montreal also saw increased vacancy rates, attributed to fewer temporary workers and international students. Despite the rising vacancies, average rents still outpaced income growth, largely due to significant increases applied during lease renewals.
Vancouver is witnessing a historic change, with purpose-built rental vacancy rates hitting 3.7 per cent – the highest level since 1988. This surge in availability has pushed rent growth to a two-decade low.
Calgary’s rental market remains relatively stable, with a five per cent vacancy rate. Strong demand continues to balance the rapid growth in rental supply, which experienced its largest increase in decades this year, growing by 11 per cent.
While the increased supply and incentives offer some relief, affordability remains a critical challenge. The availability of rental units within reach for lower-income households remains severely limited, highlighting the ongoing need for solutions addressing this disparity.
Condo rentals also saw increases, with average rent for a two-bedroom unit reaching $2,305, up 4.8 per cent year-over-year, and a vacancy rate of 1.3 per cent. This segment of the market remains tighter than purpose-built rentals.
