Is Purpose‑Built Rental Development Coming Back in 2026? What Owners Should Watch For

As a rental property owner, monitoring rental supply trends is essential for pricing, marketing, and strategic planning. After years of tight conditions and limited purpose‑built rental starts earlier in the decade, Canada’s rental market is showing signs of shifting toward a more balanced supply‑demand environment particularly as we head into 2026.

The Canada Mortgage and Housing Corporation’s (CMHC) 2025 Rental Market Report reveals that vacancy rates for purpose‑built rental apartments across Canada rose to 3.1% in October 2025, up from 2.2% in 2024, and now sit above the national 10‑year average. According to CMHC Deputy Chief Economist Tania Bourassa‑Ochoa, this change reflects a combination of historically strong completions of rental units and weaker demand caused by slower population and economic growth. As vacancy increases, overall rent growth has slowed, prompting some landlords to offer incentives such as free months’ rent or moving allowances.

In Metro Vancouver, the trend is even more pronounced. CMHC data shows that the vacancy rate in purpose‑built rentals climbed to 3.7% in 2025, its highest level since 1988, and rent growth in the region slowed as a result of increased supply and softer demand.

Although these vacancy figures signal a shift in market conditions, they do not necessarily mean a broad “boom” in new construction, rather, they reflect more units entering the rental stock and demand adjusting to changing demographic conditions.

What This Means for Owners

Evolving Supply Dynamics
Increases in vacancy rates are tied to elevated rental completions in recent years. While CMHC’s public summaries do not provide exact counts of units under construction, they confirm that many more rental units completed in 2024 and 2025 have absorbed some pent‑up demand and loosened market tightness. This trend suggests that new supply is exerting downward pressure on rent increases and creating more choices for renters.

For owners of older properties or smaller portfolios, this change signals the importance of ongoing market benchmarking. Specifically, understanding how your unit compares to newer purpose‑built condos and rental buildings (amenities, finishes, space, location) helps you anticipate pricing pressures and vacancy risks as supply continues to grow.

Vancouver’s Market Conditions
Vancouver’s experience offers a clear local example. With its purpose‑built rental vacancy rate at 3.7%, renters have more leverage than in previous tight cycles. This can translate into longer lease‑up periods and increased negotiation around rents and concessions, especially for older buildings lacking modern amenities.

At the same time, average rent growth in Vancouver has been modest. According to local reporting, CMHC data placed the average rent for a two‑bedroom apartment at around $2,363/month in 2025, with year‑over‑year growth significantly below recent historical levels.

Demand Factors at Play
Much of the shift in vacancy and rental dynamics can be linked to broader macroeconomic and demographic forces. Slower population growth — in part due to tighter immigration numbers and lower non‑permanent resident arrivals — has softened rental demand in major metro markets. As a result, even as rental completions increased, demand has not kept pace at the same rate.

What Owners Should Watch in 2026

Monitor Construction and Completions Data
While exact under‑construction unit counts are not published in the headline CMHC releases, regular tracking of quarterly housing starts and completions will give early signals of future supply pressure. If completions continue at high levels, vacancy may remain elevated or rise further.

Watch Migration and Demographic Trends
Population flows, especially international student enrolments and temporary work permits, strongly influence rental demand in Vancouver and other major centres. Policy changes that affect these inflows can materially shift the balance between supply and demand.

Assess Competitive Positioning
With vacancy rates at multi‑decade highs, consider how your units stack up against newer purpose‑built buildings. Amenities such as in‑suite laundry, secure parking, updated appliances, and community spaces often influence tenant choice when supply is ample.

Plan for Lease Renewals and Pricing Adjustments
Elevated vacancy creates more negotiation room for renters. Owners should plan pricing strategies carefully, potentially offering incentives or shorter‑term promotions that attract quality tenants without eroding long‑term value.

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Purpose‑built rental development in Canada is not disappearing. Higher vacancy rates, especially in Vancouver, reflect a broader shift in 2025 toward a more renter‑favourable market. While the era of ultra‑tight conditions may be softening, supply pressures and demographic changes are creating new competitive dynamics.

For owners, the key takeaway is this: stay informed, benchmark regularly, and align your rental strategy with current supply and demand conditions. As 2026 unfolds, this disciplined approach will help protect income, reduce vacancy risk, and position your properties for long‑term stability.

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