Are You Priced Right in 2025? Navigating Canada’s Recent Rent Decline

After several years of steep rent growth, Canada’s rental market is now showing signs of softening. According to the October 2025 Rentals.ca National Rent Report, average asking rents across the country fell 3.2% year-over-year, reaching a national average of $2,123/month—the lowest level since mid-2023. This represents a meaningful shift for property owners, especially those who have grown accustomed to annual increases and strong tenant demand.

Meanwhile, the Canada Mortgage and Housing Corporation (CMHC) mid-year 2025 update confirms the trend. In major markets like Vancouver, Toronto, and Calgary, advertised rents for two-bedroom purpose-built apartments fell between 2% and 8% year-over-year during the first quarter of 2025. These figures suggest that rental softness is not limited to one or two cities, but is becoming more broadly felt across Canada.

For owners, this is a critical time to reevaluate your rent pricing and positioning. What worked in 2023 or 2024 may not hold in today’s market.

What’s Causing This Slowdown?

The current cooling trend is largely driven by two macroeconomic forces: a surge in new housing supply and a measurable slowdown in population growth—especially among non-permanent residents.

1. A Surge in Supply

CMHC reports that new rental completions in 2024 reached a 25-year high, and that trend has continued into 2025. Thousands of purpose-built rental units—particularly in urban centres like Toronto, Calgary, Edmonton, and Vancouver—have entered the market over the past 18 months. Many of these were planned during the 2020–2021 building boom, when demand was soaring and developers raced to meet projected housing needs.

These new buildings aren’t just increasing inventory—they’re also offering aggressive move-in incentives, free rent periods, or high-end amenities to attract tenants. This creates downward pressure across the entire rental spectrum, including older or mid-tier units, as renters have more choices and greater negotiating power.

2. Slower Growth in Immigration and International Students

In its 2025 Mid-Year Rental Market Update, CMHC emphasizes that growth in non-permanent residents has slowed significantly. The federal government’s caps on international student permits and temporary resident visas—announced in 2024 to ease housing pressure—are now having a clear impact.

This slowdown is particularly affecting university towns and large metro areas where international students, newcomers, and foreign workers have traditionally played a key role in rental demand. With fewer new arrivals entering the rental market, demand is no longer keeping pace with new supply.

3. A Cooling Labour Market

Economic conditions are also contributing to reduced rental demand. In 2025, job growth in sectors like tech, finance, and construction has slowed in many regions. CMHC notes that youth unemployment remains elevated, and fewer people are forming new households or relocating for work. When job confidence declines, rental activity slows—people stay with roommates longer, delay moving out of their parents’ homes, or postpone upgrading to larger units.

Are You Still Priced Competitively?

To assess whether your property is priced appropriately, begin by comparing your current rate against similar listings posted in the last 30–60 days. Focus on real-time data, not lease renewals signed a year ago. Pay attention to location, size, amenities, condition, and included utilities. Use platforms like Rentals.ca, Zumper, or local real estate boards to benchmark.

If your unit’s rent is significantly higher than comparable listings in your area—particularly if your unit lacks features like in-suite laundry, modern appliances, or dedicated parking, it may be time to adjust. That said, if your property is updated, well-maintained, and professionally managed, it may still command a premium.

In this new environment, overpricing your unit can lead to extended vacancy, increased turnover, or reduced tenant quality. Conversely, underpricing—while perhaps attractive for retention—may still erode long-term cash flow if it’s based on outdated assumptions about what the market will bear. Some submarkets remain resilient, and certain unit types (like one-bedroom condos near transit) may still perform well. The key is knowing what’s happening in your exact neighbourhood and adjusting accordingly. At Maximum Inc. Property Management, we are more than aware of the changing rental trends in our area and we keep our rentals priced competitively for their area.

What Might Happen Next?

The Canadian rental market in 2025 looks very different from the last few years. Rents are softening. Inventory is rising. New immigration caps are reshaping demand. And tenants have more choices than they did 12–18 months ago. 

While rents are down today, the long-term fundamentals of the rental market remain strong. Canada continues to face a structural housing shortage, and demand is expected to rebound when immigration targets resume, employment stabilizes, and interest rates normalize.

CMHC notes that Canada still requires over 3.5 million new homes by 2030 to restore affordability. If construction slows in response to today's softening, it could create another supply crunch in the years ahead.

In the short term, however, owners should expect more competition, slower leasing velocity, and increased tenant sensitivity to price and value.

For owners, the most important thing right now is to remain informed and responsive. Accurate rent positioning, proactive lease renewals, and thoughtful upgrades will go further than ever in keeping your units filled and your income stable. Contact your local property manager at Maximum Inc. to start discussing how we can help you stay profitable in today’s rental market.

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