Canada's rental market experiences a decline as transient residents depart the country
In the first quarter of 2025, Canada experienced a significant shift in its rental market and population growth. The number of temporary residents (work and study permit holders) decreased by 61,111 between January 1, 2025, and April 1, 2025. This decline, coupled with a reduction in permanent resident admissions, led to a slowdown in Canada's population growth, with only 20,107 people added during this period.
The rental market is projected to undergo a period of adjustment, particularly in Ontario, due to slower population growth and evolving employment conditions. Advertised rents in major cities like Calgary, Toronto, Vancouver, and Halifax saw declines of between 2-8% in Q1 of 2025, compared to the same time in 2024. This trend was also observed in other key housing markets, such as Montreal, Edmonton, and Ottawa, where the rate of increase in advertised rents slowed substantially.
The Canada Mortgage and Housing Corporation (CMHC) reported declines in asking rents in several major housing markets, including Toronto, Vancouver, and Calgary. The CMHC attributes these decreases to reductions on the demand side of the stock market today, in conjunction with strong gains in supply.
The CMHC's report also indicates that the cap on international student intake and changes to how students are distributed across provinces are putting downward pressure on rental demand in British Columbia, Ontario, and Nova Scotia. In response, purpose-built rental operators are offering incentives such as one month of free rent, moving allowances, and signing bonuses to attract new tenants.
Rent control regulations, which vary widely across Canadian provinces, are designed to protect tenants from sudden, steep rent increases and can provide more affordable entries into Canada's labor market for newcomers. For instance, Ontario has rent control, but it only applies to residential units built or first occupied prior to November 15, 2018. Quebec and Nova Scotia have rent control with caps of 5% yearly until December 31, 2027.
However, the recent decline in advertised rents does not necessarily indicate a significant easing of overall housing affordability. Advertised rent-to-income ratios in several Canadian housing markets remain high, despite the declines in advertised rents. The CMHC further reports that completions of rental housing units are above their "10-year historical averages" in most of Canada's housing markets.
Landlords are observing that vacant units are taking longer to lease, particularly for new purpose-built rental properties in Toronto, Vancouver, and Calgary. Owners in the secondary rental market are generally more willing to lower rents to reduce vacancies.
In summary, the decline in temporary residents and slower international migration have contributed to a shift in Canada's rental market, with declines in advertised rents being reported in major cities across the country. However, the overall picture of housing affordability remains complex, with factors such as rent control regulations, supply and demand dynamics, and income levels all playing a role.
