Rents easing, vacancies tight: what 12 months hold for Canada’s top rental cities

TL;DR

• Rents are easing in Canada’s largest markets as new supply hits the market and immigration slows. Still, vacancies remain relatively tight in many CMAs, keeping turnover rents and incentives common.
• Expect a cautious year: landlords experimenting with concessions; tenants having more negotiating power on new leases but not a wholesale shift to affordability.
• Major cities (Toronto, Vancouver, Calgary, Montréal, Ottawa) show slower rent growth but uneven impacts by submarket and property type. Policy programs, mortgage financing for rental construction, and population trends will shape supply and pricing into 2026.

Introduction: a nuanced cooling in a still-tight market

After several years of red-hot rent growth, Canada’s rental market is showing early signs of relief in many urban cores. The national narrative is shifting: rents for advertised listings have edged down in several major markets, while the stock of purpose-built rental units keeps expanding thanks to federal and provincial housing programs. Yet vacancies remain stubbornly low in some pockets and high rents remain a barrier for many households. For renters, this is a year of cautious optimism; for investors and operators, it’s a year to test pricing, incentives, and lease terms in a softer but still competitive market.

CMHC and market observers point to a few core drivers: higher construction of new rental stock, slower international migration, and more competition from secondary rental options such as condo units and single-family homes. The combination keeps the market in a state of adjustment rather than a wholesale correction. In other words, rent relief is real, but it comes with caveats and regional nuance. CMHC’s quarterly updates and the Rental Market Report through 2025 show these patterns playing out across Canada’s largest CMAs.

What the latest data show by city and market segment

1) National picture: a modest easing amidst tight fundamentals

• National vacancy rates rose modestly in 2024–2025 as rental starts surged. While the increase in supply has been meaningful, demand remains sensitive to migration, employment, and affordability considerations. The overall picture is that rents are stabilizing or falling modestly on advertised terms, while occupied-unit rents still rise—but at slower paces than during the peak years. This aligns with CMHC commentary on rising vacancies and more competitive leasing conditions in the top markets. cite
• Observers note that turnover rents (what tenants pay when moving from one unit to another) still show strong dynamics, even as new leases become less aggressive in rent growth compared to 2023–2024. This suggests ongoing affordability pressure for new tenants, even as landlords deploy incentives to keep occupancy high. cite

2) Toronto and the Greater Golden Horseshoe: competition from supply, selective relief

• Toronto remains the bellwether for Canada's rental market. In 2025, advertisements and rents softened, but the city’s high cost of living and limited affordable stock keep pressure on tenants. CMHC notes that vacancy rates rose more slowly in the GTA, and landlords increasingly used incentives (one month free rent, moving allowances, signing bonuses) to attract new leases. The rental gap between vacant and occupied units remains pronounced, which continues to influence lease terms and turnover decisions. cite
• The Toronto market illustrates a broader Ontario story: immigration patterns, university demand, and supply constraints shape outcomes in the near term, even as overall rent growth cools. Expect more nuanced shifts by neighborhood, with core transit-accessible areas continuing to show tight conditions and newer, purpose-built buildings competing with secondary rental stock. cite

3) Vancouver: a leading edge of the soften-and-compete trend

• Vancouver has been among the markets with the sharpest advertised-rent reductions in early 2025, driven by a combination of added supply and slower demand growth. Vacancy gains have not fully translated into universal affordability, but incentives and flexible leasing terms have become more common as landlords attempt to backfill new units. The city’s affordability challenges persist despite the easing. cite

4) Calgary and Edmonton: regional divergence under a national trend

• In Alberta, rents have shown a mixed trajectory with Calgary among the markets seeing some of the larger advertised-rent declines, while Edmonton and other Alberta markets show more modest declines or stabilize. The supply surge has started to temper some of the earlier red-hot dynamics, but job-market and population trends continue to shape outcomes. Investors are watching how new rental starts interact with migration and demand. cite

5) Montréal and Ottawa: steady moderates in a sea of cross-provincial shifts

• Montréal and Ottawa have shown more resilient rent growth on occupied units, while advertised rents eased. These markets highlight how provincial policies and population flows influence rent dynamics in bilingual and federal-adjacent markets. The inclusivity of rent incentives remains an important tactic for landlords in these cities. cite

6) Halifax and the Atlantic markets: early indicators of national diversity

• Atlantic markets have seen some of the more tolerable rates of rent change, with incentives and supply adjustments shaping the leasing landscape. These markets illustrate how Canada’s geographic diversity affects the national rental story, even as supply tightens elsewhere. CMHC notes that vacancy and advertised rents can diverge by CMA, underscoring the importance of local market context. cite

Why supply is the fulcrum of the near term

• The growth in purpose-built rental supply is a central thread of 2024–2025. Strengthened financing and insurance programs for rental construction helped push starts higher and contributed to the national vacancy uptick. In CMHC’s reports, this supply growth is presented as a durable factor that will continue to influence rents and incentives through 2026. If construction accelerates further, vacancy rates could rise in more markets, widening the gap between advertised rents and occupancy costs for some tenants. cite
• The Apartment Construction Loan Program (ACLP) and CMHC’s multi-unit financing tools have been highlighted as catalysts for new rental stock in 2024–2025, particularly in larger CMAs. This policy-backed supply response is a critical backdrop for any rental strategy this coming year. cite

What this means for rental strategy in the next 12 months

This section translates the macro data into practical considerations for landlords, property managers, and tenants navigating Canada’s top markets in 2025–2026.

For landlords and property managers

• Expect a more competitive leasing environment for new tenants, with landlords offering concessions to fill vacancies faster. Typical incentives include one month of free rent, moving allowances, and signing bonuses. Build these costs into your capitalization rates and budgeting. cite
• Price discipline remains important. While advertised rents are easing, rents on occupied units continue to rise, albeit slowly. Carefully calibrate renewals and targeted outreach to minimize turnover costs while maintaining occupancy. cite
• Leasing strategy should diversify by product type. In major markets, purpose-built rentals compete with condo units and single-family rentals. A differentiated approach that emphasizes building quality, services, and location can help sustain occupancy without chasing high turnover rents. cite

For tenants and renters

• Look for value in incentives, but weigh total cost of occupancy. A lower sticker price on advertised rents may be offset by longer-term renewal costs or less favorable turnover terms. Net effective rent over a 12–24 month horizon is a helpful lens. cite
• Consider submarket dynamics. Core downtown pockets often remain tighter and pricier, while fringes and secondary markets gain breath as supply catches up. Economics can vary widely within a CMA, so tailor search criteria to neighborhoods with a balance of access, price, and quality of life. cite
• Factor broader macro forces. Immigration trends, employment prospects, and interest-rate expectations influence rental demand. Canada’s monetary policy backdrop (the Bank of Canada’s rate path) can indirectly affect rent dynamics via affordability and mortgage costs that shape renter budgets and investor activity. Stay attuned to policy signals as the year unfolds. citeturn0news13

Policy context and the mortgage-finance backdrop

• Canada’s rental market is not purely a private-market story. Federal and provincial programs aimed at expanding rental supply (and easing construction financing) have a direct impact on vacancy and rent trends. For operators, engaging with program guidelines and timelines can be meaningful when planning 2026 capex and debt service. cite
• For buyers who are considering the rental-play as part of a broader investment strategy, be mindful of provincial tax and incentive regimes, along with mortgage-qualification dynamics. While this blog isn’t offering financial advice, understanding how rental revenue interacts with financing costs remains crucial as rates and programs evolve. cite

Regional snapshots: how the macro trend plays out locally

• Ontario’s major markets (Toronto, Ottawa) show pronounced but moderating rental dynamics. Expect continued competition for well-located, quality-built housing with incentives as a tool to attract tenants. cite
• British Columbia’s Vancouver market leads the easing in advertised rents, yet the city’s supply constraints and high living costs keep affordability in the spotlight for lower- to middle-income households. cite
• Alberta’s markets (Calgary, Edmonton) illustrate a broader national trend toward stabilization with pockets of softening in advertised rents as supply expands. Watch population and job-market signals for directional shifts. cite
• The Atlantic provinces offer a more balanced outlook with steady demand and growing supply, contributing to Canada’s geographic mosaic of rental conditions. cite

Looking ahead: what to watch in 2026

• Vacancy rate trajectories will remain a critical barometer. If construction stays elevated and immigration remains moderate, vacancy could drift up in more markets, which would support continued concessions but potentially slow rent growth. CMHC’s ongoing reporting will be a key reference point for landlords and tenants alike. cite
• Government and lender programs will continue to shape the speed and location of new rental supply. Operators should align project timelines with program windows to optimize incentives and financing reliability. cite
• Market sentiment among tenants and landlords will hinge on relative affordability gains. Even with headline rent relief, the rent-to-income burden remains a real stress point for many households in large metros. Buyers and investors should consider how shifts in tenancy terms affect cash flow, risk, and long-run demand. cite

Practical takeaways for readers

• If you’re renting in 2025–2026, monitor lease renewal terms closely. A renewal can be less expensive than a new lease with heavy concessions, but promotions around move-ins may extend the total cost-of-occupancy. Ask about closing costs and any included services that add value.
• If you’re an owner-operator, benchmark against nearby properties and consider temporary concessions only as needed to maintain occupancy. A data-driven approach to incentives can protect long-term yield.
• For those thinking about rental investments, diversify strategies across markets with different supply-growth profiles. The rent-relief trend provides an opportunity to time acquisitions with favorable cap rates, but it requires a measured view of demand, migration, and policy support.

Final thoughts

Canada’s rental market is entering a calmer but still complex phase. Rents are easing in the frontal markets, but vacancies remain tight enough in several CMAs to sustain competitive dynamics and incentives. The next 12 months will be a test of how quickly supply can respond to demand, how landlords calibrate pricing and concessions, and how policy and macroeconomic forces align to shape affordability for households. Keeping a close watch on CMHC updates and local market signals will help renters, landlords, and investors navigate this evolving landscape with legitimacy and clarity.

Notable caveats

• This post offers context and observations for informational purposes and is not financial, legal, or tax advice.

Sources

• Canada Mortgage and Housing Corporation (CMHC) Rental Market Update on major markets, 2025: https://www.newswire.ca/news-releases/cmhc-releases-update-on-canada-s-largest-rental-markets-814748341.html
• CMHC Rental Market Report highlights and 2024–2025 trends (national and city-level): https://www.newswire.ca/news-releases/historic-rental-supply-growth-raises-canada-s-vacancy-rate-864209826.html
• Local coverage of rent declines in the first half of 2025 (city-by-city): https://www.cp24.com/news/money/2025/07/08/rents-easing-across-most-major-markets-but-many-tenants-not-feeling-relief-cmhc/
• CMHC update on advertising rents and supply in 2025 (Canada’s largest markets): https://ca.finance.yahoo.com/news/rent-growth-slowed-2025-national-192346842.html
• CMHC press release on 2025 rental-market conditions by CMA: https://www.newswire.ca/news-releases/cmhc-releases-update-on-canada-s-largest-rental-markets-814748341.html
• Market commentary on rent concessions and incentives in 2025: https://
• National rental-market trends and vacancy insights (CMHC context): https://
• Vancouver rent trends and market signals (media coverage): https://
• CMHC Rental Market Update (December 2024 snapshot): https://
• Immigration and rent trends influence (October 2025 outlook): https://
• General Canadian rental-market data and policy context (newswire summaries): https://