Canadian rental prices have shown modest affordability gains, but the relief is already ending. A new report from rentals.ca shows the average asking rent fell in May compared to last year, with the largest and most expensive cities seeing the steepest declines. However, recent months show rent growth is re-accelerating—signaling the window for relief could be closing.
Canadian Rents Are Down 3.0% From Last Year
Canada’s rent prices are finally showing signs of softening, though progress remains minor. The average asking rent fell 3.3% year-over-year to $2,129 per month in May, marking the eighth consecutive month of annual declines.
However, this pullback does little to undo the damage in recent years. Rents remain 21.1% higher than they were in 2020, with a compound annual growth rate (CAGR) of 4.9%. That’s more than double the Bank of Canada’s 2% target inflation rate—highlighting how out-of-control prices have become.
Canada’s Largest Cities Are Seeing The Sharpest Rent Drops
The country’s largest and most expensive cities have been leading the way lower. Annual declines were notable in Toronto (-7%), Vancouver (-6%), and Calgary (-10%). These cities were once key destinations for foreign capital and immigration-driven demand, but are now showing signs of saturation.
Affordability ceilings may be playing a role here—forcing households to consider value. There’s only so much a household can devote to rent before they migrate to more affordable regions. This can apply more downward pressure on expensive cities, but also increase demand (and thus prices) in smaller cities.
Canada’s Improving Rents May Be Over As Price Growth Surges
While annual growth remains negative, most of the progress appears to have occurred earlier in the 12-month window. More recently, asking rents have climbed 2.0% over the past three months—the fastest short-term growth rate since 2023. When annualized, that pace is roughly four times the Bank of Canada’s inflation target.
This trend suggests any perceived affordability improvements may be short-lived. Rent prices are already beginning to climb again, raising doubts about whether the recent dip is a temporary move rather than a real improvement.
Despite a weakening macroeconomic backdrop, rents are rising again. Years of cheap credit and using immigration as stimulus led to a surge in prices. While some of that pressure has eased, it won’t stay that way—especially with financial landlords set to play an increasing role in the government’s housing strategy.