In mid 2024, rent prices dipped slightly in major Canadian cities. Analysts were hopeful that prices would continue to drop, and renters were looking forward to more affordable housing. If you’ve been watching Toronto rent prices, Vancouver rent prices, Calgary rent prices, or the overall Canada rent prices decline, you’ll have noticed that the dip didn’t turn into a sustained drop.
So what is happening with the rental market in Canada? Why are rents still so high in Canada’s urban centres, and is there any relief on the horizon for renters?
Rent Price Trends by City
The picture across Canada is not uniform. In each market, there are different factors driving rent prices.
Toronto Rent Prices
Toronto rent prices did decline in 2024 and into early 2025. One-bedroom unfurnished units downtown dropped from $2365 a month in December 2024 to $2090 in December 2025. There were similar declines in other areas of the city.
However, these declines were primarily for premium downtown apartments and smaller units. If you were looking to rent a two or three-bedroom apartment, Toronto rent prices largely remained the same.
Vancouver Rent Prices
In Vancouver, average rents fell by 5.8% in 2024. One-bedroom units that were going for $2760 dropped to about $2367 by early 2025. While this is a positive trend, it still doesn’t make housing affordable. Despite record vacancy rates and falling asking prices, the rents that Vancouver residents are paying are still extremely high by any reasonable standard and show no signs of major drops.
Calgary Rent Prices
In Calgary, rent prices have fluctuated in the last few years. After a 14% average annual rent increase in 2023, Calgary’s rents fell 7.2% in 2024, reaching an average of $1921 dollars. By early 2025, one-bedroom units were averaging around $1567. This drop in prices was driven by high levels of new construction and rising vacancy rates.
This is good news for Calgary renters, but analysts are warning that the drops might not be long-lasting. The lowering of rents was driven by new construction and high vacancy rates, but building has since slowed, and demand will eventually catch up with supply. Although some rental decreases may be sustained, further drops are unlikely.
Why Rents Aren’t Falling
Although rents are falling slightly, they haven’t dipped as much as renters were hoping and industry-watchers were predicting. There are several factors responsible:
The Supply of Affordable Units Is Low
High levels of purpose-built rentals were completed in 2024, and vacancy rates rose in most markets, but with high construction, land, and financing costs, the units that have become available are expensive.
While middle and high-income people can afford these higher-priced new units, lower-income people have been priced out of these buildings. They continue to rent in older buildings with cheaper rents, where prices have not declined.
Tenant Turnover Has Increased
In rent-controlled markets, landlords have limits on how much they can increase rents for existing tenants. However, when a tenant leaves, they can charge the new tenant more. Tenant turnover has recently increased, which has led to higher average rent prices.
Construction Has Slowed
Construction of new units has dropped off, putting upward pressure on rents. The more demand there is, the more landlords can charge. Ultimately, supply depends on whether developers are willing to start new construction, but in many centres, the incentives to build rental units are not there.
The Population Is Continuing to Grow
Although immigration has slowed, Canada is still welcoming newcomers. And they still need a place to live. Most new immigrants rent before they buy, often for several years. Even with slower population growth, Canada is still feeling the effects of years of undersupply, especially in affordable units, so current population increases are putting upward pressure on rents.
High Rents Are “Sticky”
Once rents reach a certain level, they tend to stay there or at least resist falling. Landlords have costs that they need to cover to earn a sustainable return on their investments. Expenses like borrowing costs, property taxes, insurance, maintenance, and utilities have only gone up in recent years, keeping rents at high levels.
Lack of Affordability Limits Tenant Mobility
Some tenants continue to pay higher rents because moving is so expensive. Between first and last months’ rent, moving expenses, and possible overlap between leases, some tenants just can’t afford to move to a cheaper apartment. This keeps occupancy rates in more expensive buildings high and prevents the competition for tenants that would normally drive rents down.
Average Rent Figures Are Misleading
The term “average rent” doesn’t tell the whole story, especially not for people who are looking for a rental unit. Here’s why:
- Average rent calculations include units at all price levels, but lower-priced units get snapped up quickly, while more expensive ones sit on the market. For example, if you had 100 apartments renting at $1500 and 100 at $2000, the average rent would be $1750, but that doesn’t mean renters will be able to find an apartment for $1750.
- Rent-controlled units skew averages. The same apartment under rent control might be priced at $1600, while it would cost $2400 to rent that unit as a new tenant. The average rent for that apartment might be $2000, but if you’re looking for a place, you’ll pay $2400 for it.
Although average rent figures aren’t intentionally false, they do mean that “lower average rent” doesn’t translate to tenants actually paying lower rents.
Looking Ahead to Where Rents Are Going
If you were hoping for drastically lower rents in 2026, that’s unfortunately unlikely. Toronto rent prices, Vancouver rent prices, and Calgary rent prices are slightly lower on average, but a big decrease isn’t on the horizon.
The fundamental problem is that Canada experienced years of undersupply. When developers responded with more construction, they faced rising material, labour, and permitting costs, along with a scarcity of affordable land. Although the increase in supply led to a temporary dip in rents, slowing construction means demand will eventually catch up.
While this paints a bleak picture for renters, there’s cause for optimism. As the affordability crisis continues, Canadians and Canadian advocacy groups have put considerable pressure on politicians to free up funding for housing and implement policies that will lower housing costs. If these efforts succeed, there could be relief for renters in the near future.
