Rent price growth cooled in 2025, with vacancies on the rise: CMHC

Canada’s rental market cooled slightly in 2025, but renters are still facing steep costs across most of the country.

New data from Canada Mortgage and Housing Corporation (CMHC) shows rental market conditions softened in 2025 as more supply came online and vacancy rates rose — a shift that has slowed rent growth, without meaningfully improving affordability in most markets.

CMHC said the average rent for a two-bedroom purpose-built apartment rose 5.1% to $1,550, only slightly slower than the 5.4% increase recorded in 2024.

At the same time, the national vacancy rate rose to 3.1%, up from 2.2% a year earlier and now above its 10-year average, reflecting a market that is no longer tightening at the pace seen in recent years.

“The tight conditions that defined rental markets in the past few years in Canada’s largest cities loosened in 2025,” said Tania Bourassa-Ochoa, CMHC’s deputy chief economist, in a statement (1).

“However, affordability is still a challenge in most markets, as the supply of units affordable to lower income households remains low.”

More supply is giving renters slightly more leverage

CMHC attributed the shift in rental conditions to historically strong completions of purpose-built rental units, combined with slower demand driven by weaker population growth, fewer international students and softer labour market conditions — particularly among younger renters who typically drive new household formation.

As vacancies rose, CMHC reported that landlords in many major cities lowered rents on new leases to remain competitive. The agency found that turnover rents for two-bedroom units declined in Vancouver, Calgary, Toronto and Halifax, reversing the sharp increases seen in 2023 and 2024.

The report also noted that purpose-built rental operators increasingly offered incentives such as one month rent-free, moving allowances and signing bonuses to attract new tenants — a sign that competition has returned in markets where supply has grown fastest.

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Why average rents are still rising

Despite softer conditions for new leases, average rents paid by all tenants continued to rise in 2025.

CMHC found that roughly 40% of the increase in average two-bedroom rents came from tenant turnover, as vacated units were repriced at higher levels when new tenants moved in.

Rent price growth varied significantly by region in 2025:

• Montréal and Halifax saw rent growth accelerate, largely driven by higher increases applied to existing leases
• Vancouver and Edmonton recorded slower rent growth as landlords faced rising vacancies and declining occupancy
• Calgary held two-bedroom rents relatively steady as strong demand absorbed a rapid expansion in rental supply

CMHC also noted that stricter rent guidelines in Toronto and Vancouver limited increases for sitting tenants, making turnover rents a larger driver of overall rent growth in those markets.

Condo rentals added competition — but remain costly

CMHC said the rental market also saw added competition from condominium apartments, particularly in Toronto and Vancouver. Owners facing weaker resale conditions shifted more units into the rental market, increasing supply and competitive pressure on purpose-built rentals.

Even so, condo rentals remained significantly more expensive. The average rent for a two-bedroom rental condominium rose to $2,305, up 4.8% year over year, while the vacancy rate for condo rentals sat at just 1.3%, well below purpose-built rental levels.

For renters, the findings suggest that conditions are no longer worsening in many major cities. Higher vacancy rates have increased choice and reduced competition for some units, particularly for renters able to move or negotiate. That said, rents remain high, and affordable units continue to be in short supply.

For small landlords, the shift brings its own pressures. As turnover rents soften and vacancies rise, CMHC said landlords will have less room to raise rents when units change hands, which is expected to limit overall rent growth going forward.

Looking forward, CMHC expects affordability to improve gradually as long as vacancy rates remain elevated and income growth stabilizes. For now, the agency’s data points to a market that has eased slightly — but one where housing costs are still out of reach for many Canadians.

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650 CKOM (1)