Rental supply has been rising across Canada, putting downward pressure on advertised rents in cities most vulnerable to the “headwinds” brought on by sluggish migration and a slowing labour market, according to a new report by Canada Mortgage and Housing Corporation.
CMHC’s 2025 Mid-Year Rental Market Update, released Tuesday, shows elevated supply is contributing to lower advertised rents in cities like Calgary, Toronto, Vancouver, and Halifax, where prices in Q1 declined from 2024.
Halifax saw the biggest drop, as the average asking price of two-bedroom condo apartment rentals dropped 8.3% year-over-year.
In Vancouver and Halifax, prices were down nearly 5 per cent for two-bedroom purpose-built rental apartments, and down about 3.5 per cent in Calgary and Toronto.
Edmonton, Ottawa and Montréal, however, continued to see an annual increase in the average advertised rent, although at a slower pace.
International migration and labour markets drag prices down
The impact of slower international migration is a significant factor in the recent decline in advertised rents, said CMHC.
“The cap on international student intake and adjustments to their provincial distribution are influencing rental demand in British Columbia, Ontario and Nova Scotia. These provinces all saw declines in work and study permit holders in Q1 2025, while growth in the number of non-permanent residents slowed in Quebec and Alberta,” reads the report.
Demand is also softening due to sluggish labour markets.
New entrants to the rental market are hampered as youth unemployment is above its five-year average across most major markets. Even the unemployment rates of recent post-secondary grads are now above longer-term averages, notes CMHC.
“However, labour market trends vary across markets. Labour markets in Vancouver and Toronto are showing some signs of weakening, while conditions are relatively strong in Halifax, Calgary and Edmonton so far in 2025, due to elevated full-time employment gains.”
Increasing turnover
In October 2024, turnover remained at the lowest rate recorded by CMHC’s Rental Market Survey since data collection began in 2016.
However, since then, “stakeholders in several major cities have indicated an uptick in turnover because of higher vacancies and incentives encouraging tenants to move,” said CMHC.
Vacancy rates set to rise further
Over the rest of 2025, the rental market is also expected to be influenced by slower population growth and changing employment conditions.
“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.”
Newer purpose-built rental properties will face more pressure from longer lease-up phases and increased vacancy rates.
“While the market may have abundant supply in the short-term, there is still a need to maintain momentum in new rental supply to meet the needs of projected future population growth and to achieve better affordability outcomes for existing households.”
