Falling immigration levels contributing to lower housing rents in Canada
Canada’s rental housing landscape is shifting now that we’re halfway through 2025, as a wave of new units enters the market and demand cools. This initial wave of newly built supply appears to be working as intended, and its impact is being compounded by a range of other major factors.
According to Canada Mortgage and Housing Corporation’s (CMHC) latest Mid‑Year Rental Market Update, freshly advertised rental rates in major metropolitan areas have begun to drop — but affordability remains a pressing concern for many Canadian renters.
Record levels of rental housing supply have eased competition for new listings. In the metropolitan areas of Vancouver, Calgary, Toronto, and Halifax, asking rents dropped by two and eight per cent in the first quarter of 2025 compared to the first quarter of 2024. Meanwhile, Edmonton, Ottawa, and Montreal saw continued rent growth, though at a slower pace.
- You might also like:
- Canada's four most expensive cities to rent are in Metro Vancouver
- Desperate Vancouver renters are sharing rooms divided by curtains
- Opinion: Government needs to act, as B.C. developers can't build rental housing if the numbers don't work
Newly built secured purpose-built rental housing in Vancouver, Toronto, and Calgary are now taking longer to lease. This is due in part to unsecured individual owner-investor rental homes in the secondary market intensifying competition, often by offering lower rents.
As a result, many landlords in newer buildings are now sweetening deals, such as the first month with free rent, moving allowances, and/or signing bonuses. CMHC notes that incentives may increase as supply continues to expand.
The federal government’s financing programs are playing a key role in driving this new supply, as they provide a lower-cost borrowing mechanism as opposed to the high interest rates associated with traditional lenders in the financial market. In 2024, 88 per cent of new secured purpose-built rental housing starts were backed by CMHC’s Multi-Unit Mortgage Loan Insurance (MLI) products and the Apartment Construction Loan Program (ACLP) — up dramatically from just five per cent in 2017.
Calgary, Edmonton, and Montreal’s increases were driven by the rapid adoption of MLI, while Vancouver and Toronto saw a greater uptake of ACLP.
Due to the federal government’s new immigration caps, a slowdown in international migration — especially among students and temporary workers — has dampened rental housing demand in British Columbia, Ontario, and Nova Scotia. The number of work and study permit holders declined in early 2025. Youth and recent-graduate unemployment also remain elevated across most major centres, further softening demand.
CMHC
CMHC
CMHC
Despite easing advertised rates, rents for occupied units continue to rise. In the first quarter of 2025, average rents for two-bedroom occupied apartments increased by seven per cent to 17 per cent year-over-year across Canada’s seven largest urban areas, led by Halifax and Toronto. This reflects how turnover rents have been resetting in line with the higher rents of newly built supply.
As advertised and occupied rental rates diverge, the rent gap in markets like Toronto has ballooned. In 2024, the difference between turnover and occupied rents reached 44 per cent. Rent-to-income ratios remain critically high — around 18 per cent in Vancouver and 16 per cent in Toronto, well above pre-pandemic levels.
With affordability pressures persisting, many renters are turning to shared living and larger units as coping strategies.
Vacancy rates are expected to continue rising through 2025, particularly in secured purpose-built rental homes located near post-secondary institution campuses in Ontario.
While early signs of rental relief are emerging, sustained investment in secured purpose-built rental housing — and continued support from all levels of government — will be key to easing affordability challenges and stabilizing the market over the long term, according to CMHC.