Rent growth slows in 2025 as immigration levels also decline

As the federal government finally slowed the pace of immigration, relief may be coming to renters with more vacancies hitting the market, according to the Canada Mortgage and Housing Corp.

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As the federal government finally slowed the pace of immigration, relief may be coming to renters with more vacancies hitting the market, according to the Canada Mortgage and Housing Corp.

“After two years of strong increases, the average turnover rent for 2-bedroom units fell in most major centres. Exceptions included slight growth in Edmonton and Ottawa and ongoing increases in Montréal,” wrote the CMHC.

The Crown corporation attributed the slowdown primarily to Canada’s increased rental supply.

The average rent for a two-bedroom purpose-built apartment grew by 5.1 per cent to $1,550 this year, a decrease from the 5.4 per cent increase in 2024.

The CMHC used two-bedroom purpose-built apartments as its metric to evaluate rent price growth, which it said increased for both existing and new tenants.

As of October, the vacancy rate was 3.1 per cent, up from 2.2 per cent last October and a record-low of 1.5 per cent in 2023. The current rate surpassed the national 10-year average.

“While the vacancy rate eased for the most affordable rental units (1^st quartile) in most markets, these units remain in high demand. For the higher-end rental units (4th quartile), vacancy rates are still above average but have tightened in some markets over the last year due to a filtering effect — renters moved up to higher-priced or newly built units,” reads the CMCH study.

“As vacancies rose, landlords lowered rents on new leases to stay competitive. The average 2-bedroom turnover unit rent declined in Vancouver, Calgary, Toronto and Halifax. However, on average, new tenants were paying higher rents than sitting tenants.

Canada’s reduction in immigration was a “key driver of housing demand” in 2025, largely due to a major decline in study and work permit holders, who had accounted for much of the 15 to 34 demographic.

British Columbia and Ontario saw the largest decline in their young adult population due to the drop in international students.

Additionally, reduced hiring and rising unemployment, particularly among younger workers, “limited new household formation.”

“While overall employment appeared stable over the past year, underlying weakness was concentrated in export-focused regions impacted by trade uncertainty,” it said. “In Ontario’s main manufacturing corridor, purpose-built apartment vacancy rates have generally reached about 4%, well above the national average.”

Turnover rents saw an 8.7 per cent jump this year, a notable decrease from the 23.5 per cent year-over-year increase seen in 2024.

The average rent for a two-bedroom rental condo jumped 4.8 per cent annually to $2,305.

In Montreal, the average rent outpaced income growth, largely driven by higher increases applied during lease renewals, leading to a 7.2 per cent average price increase in 2025.

Increased rent has been a persistent issue for Montrealers. Renters paid nearly 71 per cent more in 2025 than in 2019, according to Statistics Canada.

The average asking rent for a two-bedroom apartment in Canada’s second-largest city shot up from $1,130 in 2019 to $1,930 in the first quarter of this year.