Rent Declines in Canada Mask Persistent Affordability Gaps

Average asking rents for two-bedroom apartments decreased year-over-year in six of Canada’s seven major cities. This decline follows a period of steep price increases and higher vacancy rates. However, the reduction in prices has not significantly improved affordability for typical renters.

In Vancouver and Toronto, half the cost of a two-bedroom unit consumes 39 and 36 percent of median individual income, respectively. In Edmonton, the same share represents only 20 percent of median income. GN auto markets/housing: rental market data indicates that while supply has increased, the relief is unevenly distributed across income levels.

Supply growth outpaces demand shifts

A record number of rental units entered the market as government initiatives accelerated construction. Simultaneously, population growth slowed due to lower immigration targets and fewer international students. This combination of increased supply and softer demand pushed vacancy rates higher.

Condominium investors who could not sell units in a weak ownership market began leasing their properties. This added inventory contributed to the overall rise in available rentals. Tania Bourassa-Ochoa, Deputy Chief Economist at CMHC, noted that these new units are often newer and more expensive.

Affordability remains concentrated in specific segments

Vancouver recorded an overall vacancy rate of 3.7 percent, yet it remained the least affordable city among those analyzed. Vacancies are concentrated in newer buildings and suburban units. Only one to two percent of units affordable to lower-income households were vacant.

Landlords in high-end markets offer incentives such as one to three months of free rent to attract tenants. These discounts rarely benefit lower-income households seeking basic housing. Mike Moffatt, a housing expert, stated that landlords often hesitate to cut prices deeply if they expect the soft market to be temporary.

Household formation patterns reflect cost pressures

Roommate households increased by 54 percent between 2001 and 2021, making them the fastest-growing household type. Young adults are staying with parents longer or doubling up to share costs. This behavior further softens rental demand for individual units.

Edmonton offers the most favorable conditions for median-income renters sharing a two-bedroom apartment. The lower cost share relative to income contrasts sharply with the financial strain in coastal cities. The data highlights a structural divide in the Canadian rental market.