After several years of intense competition and rapidly rising rents, Canada’s rental market is beginning to recalibrate. New data released in 2025 points to a market that is no longer tightening, but slowly loosening, as supply growth finally starts to catch up with demand.
While affordability challenges have not disappeared, the conditions renters and landlords are navigating today look noticeably different than they did just two years ago.
One of the clearest signals of change in 2025 is the increase in vacant rental units across the country. Purpose-built rental housing is no longer operating at historically low vacancy levels, a sign that the extreme shortage experienced earlier in the decade is easing.
This shift is the result of two forces moving at the same time: a growing number of new rental homes entering the market and a slowdown in the pace at which new renter households are being formed.
Rental construction has been strong for several years, supported by financing programs and policy initiatives aimed at expanding long-term rental housing. Many of the units completed in 2024 and 2025 are larger, newer, and priced at the higher end of the market.
As more of these units become available, landlords are competing with one another in ways that were uncommon during the tight market years. In some cities, this competition has led to incentives such as reduced rent periods or promotional offers designed to attract tenants.
At the same time, renter demand has softened. Population growth has slowed compared to previous years, fewer international students are seeking housing, and employment conditions for younger adults have weakened.
These factors do not mean demand has disappeared, but they do mean that it is growing more slowly than the rental supply. The result is a market that feels less frantic and offers renters more choice than they’ve had in recent memory.
Despite national trends, rental conditions continue to vary significantly by location.
Vancouver has seen a noticeable increase in available units, particularly in suburban areas where new rental buildings and rented condominiums have expanded the housing pool.
Calgary continues to add rental supply at a rapid pace, but strong population growth has helped keep vacancy levels relatively stable while slightly improving affordability.
In the Greater Toronto Area, vacancy levels in purpose-built rentals have risen, especially near post-secondary institutions, while condominium rentals remain in short supply. Lower turnover rents have made it easier for tenants to move within the market.
Montréal has experienced strong rent growth, influenced by regulated rent guidelines, which has placed additional pressure on affordability despite a less competitive market overall.
Halifax has also seen rents climb, driven by guideline increases and higher prices when units change tenants, even as vacancy levels edge upward.
Looking ahead, rental conditions are expected to continue evolving rather than snapping back to pre-pandemic norms. New rental supply is still coming online, which should keep vacancy levels from tightening again in the near term.
Rent increases are expected to slow, and if wages continue to rise, some renters may experience modest affordability improvements. Importantly, renters are likely to benefit from increased flexibility, including greater choice and improved negotiating power in many markets.
Canada’s rental market in 2025 reflects a period of adjustment rather than crisis or correction. The imbalance that once heavily favoured landlords is easing, though affordability remains a concern in many regions.
For renters, the landscape is becoming more navigable. For landlords and policymakers, the focus is shifting from managing scarcity to responding to competition and long-term stability.
Source: Analysis based on CMHC rental market data and commentary.
