What’s in Store for Canada’s Rental Market This Year

The key question for the rest of 2026, whether for those looking to find a rental deal or for investors seeking rental revenue, is whether the decline reflects a short-term market correction or the beginning of a longer trend toward more affordable rents.

Why Are Rents Falling?

According to Rentals.ca and Urbanation, December marked the 15th straight month of year-over-year declines in average asking rents nationally, with the average falling to $2,060—a 2.3 percent drop from a year earlier.

This still marks a 14 percent higher average asking rate than pre-pandemic rates in December 2019, however.

Several experts interviewed by The Epoch Times say downward pressure on rents is being driven by a slowdown in population growth and expanding supply.

Ron Butler, a veteran Canadian mortgage broker and founder of one of the country’s largest independent mortgage brokerage firms, said that an exodus of temporary foreign workers and foreign students is helping to bring rents down.

“There’s fewer new bodies coming in. In fact, either it’s dead even, or it’s a small, small decrease,” Butler told The Epoch Times.

Toronto-area real estate broker Dan Fochs said expanding rental supply in many areas is also bringing rents down as landlords compete for a shrinking pool of potential tenants.

“We’ve got record supply under construction right now, and we’ve got population growth that’s going to be the slowest that it’s been a while, if not, potentially negative,” Fochs said.

Butler’s and Fochs’ views are supported by the Canada Mortgage and Housing Corporation, which noted in a December 2025 analysis that the vacancy rate has surpassed 3 percent, helped along by slowing immigration, “record-high rental completions” and strong supply growth in cities such as Calgary and Vancouver.

More than 120,000 Canadians and permanent residents emigrated out of Canada between September 2024 and September 2025, according to StatCan.

Where Are Rents Falling?

Rents have been falling in a number of areas that have been plagued by an affordability crisis in recent years, including the Greater Toronto Area and other parts of Ontario, southern Alberta, and Vancouver’s condo market.

Some landlords in Toronto and Vancouver are even offering incentives such as a $500 move-in bonus, complimentary internet, and several months of free rent.

By the third quarter of last year the average asking rent for a two-bedroom apartment in the Greater Toronto Area (GTA) was at $2,720, down 3.9 percent year-over-year, according to Statistics Canada. Analysts at the time said they expected declines to continue through 2026.

“If you study the information carefully, there was actually 66,000 people who left Ontario. Ontario did not grow in the last quarter of last year,” Butler said.

He said the impact on rents has been dramatic especially in areas of the GTA like Brampton, where many people used to be crowded into rental units in some cases.

“That’s just vanished,” he said.

The average asking rent in the Vancouver metro area dropped 5.9 percent to roughly $3,190 in the third-quarter of last year, according to StatCan.

“We look at prices in the Fraser Valley dropping, and when you talk about Vancouver, definitely we see some softness in the condo market,” Butler said. “They’re still quite expensive, but they are falling.”

Fochs and Butler said they expect this trend to continue in other areas like southern Alberta and small towns in various provinces such as Manitoba, Quebec, and Saskatchewan.

“Rental rates probably will continue to fall,” Fochs said.

Calgary and southern Alberta have experienced years of rising migration coming in from other provinces and abroad, but the momentum is also slowing and that has been reflected in average asking rental prices and will likely continue, according to Butler.

“In southern Alberta, like in the Calgary region, there’s a lot of prices that went up steadily from the last three years in Calgary,” he said. “Now they plateaued, and you can tell from the most recent data in the last four months that prices are coming off slightly.”

Meanwhile, other locations such as Montreal which has an average asking rent of $1,930, have also declined slightly. Quebec overall is down 1.9 percent year-over-year in 2025.

Domino Effect

Despite still being considerably above pre-pandemic rates, the declining rental prices are having a concrete impact on the whole housing market and investors.

Butler said that investors have relied on the assumption that rent would continue to rise to justify buying condominiums at higher prices.

However, he noted this model has now collapsed, creating a domino effect where investors are pressured to sell before rents fall even further, adding to supply and pushing sale and rental prices even lower, particularly in condo-heavy markets in Ontario and British Columbia.

“We believe rents will continue to fall, and the rents falling has a tremendous knock-on effect to houses that eventually then require to be sold,” Butler said. “Anybody buying a house for an investment anymore? That whole concept’s been dead for going on two years.”

This is compounded by the wave of mortgage renewals that are set to come up this year, many of which are at considerably higher rates than during pandemic-era lows.

Butler said this creates a situation in which landlords are squeezed from both sides by higher mortgage payments and falling rents, adding that this is likely to lead to an increase of forced sales that also exerts further downward pressure on rents and on sale asking prices in many areas.

Policy Wildcards in 2026

Fochs pointed to a possible review of the mortgage stress test this year by Canada’s Office of the Superintendent of Financial Institutions (OSFI) which could have an impact on average home sale prices and rental rates.

“I’m interested to see [whether] that might create a little bit more buying power for purchasers,” Fochs said, while cautioning it “might not be a good move.”

OSFI left the current stress-test levels unchanged in January but may revise them later in the year, and is reportedly considering a shift toward more of an income-based approach.

The mortgage stress test is a federal regulatory requirement which requires home buyers to prove they would be able to afford loan payments at a higher potential rate than their actual rate, ensuring they could still pay if rates rose. It’s intended to reduce risk in the housing market by restricting how much buyers can borrow.

Since changes may limit or loosen how much buyers can borrow, this could affect how many prospective buyers decide to purchase a home or continue renting. If the stress test is relaxed, more people may decide to buy homes, further lowering the demand for rent and pushing prices even lower.

If borrowing rules are tightened, however, more people may stay renters, keeping rental demand steady and putting potential upward pressure on rents.

Actual Affordability

Despite declining rents, a number of polls suggest that rental affordability still remains far out of reach for many Canadians.

Some 51 percent of Canadians reported being worried about being able to afford their rent or mortgage payments in an October 2025 poll conducted by Abacus Data. The poll also found nine in 10 Canadians were concerned about the overall state of housing in the country.

Another winter 2025 poll from Rentals.ca indicated that 62 percent of Canadian renters said they spend more than 30 percent of their net income on rent, and 33 percent said they spend more than half of their income on housing.

Fochs said many factors continue to contribute to the rental affordability crisis in Canada, including high municipal development charges and a combination of federal and provincial sales taxes through the HST, along with industrial carbon taxes that raise material and transportation costs.

This raises the price to build a home, condo, or apartment and leads to higher prices overall, he noted.

As the modest declines begin to hit the rental market, Fochs said that the Prairies, Quebec, and parts of Atlantic Canada generally remain the best option to pay affordable rental rates.

“Where are you gonna get the best bang for your buck? Probably, like Saskatchewan or Manitoba,” Fochs said. “Some parts of New Brunswick as well and Quebec.”

Saskatchewan saw average rent of $1,378 in fall figures from CMHC, while data around the same date showed Manitoba averaged $1,613, New Brunswick $1,307 and Quebec $1,232. Although not all of these provinces have seen declining rents, they still represent below the national average and significantly lower than in cities like Toronto and Vancouver.

Fochs also said Ottawa and Montreal are two major cities where there is relatively good affordability compared to average wages.

The average monthly rent in Ottawa fell to $2,313 per month at the end of January, down $87 from a year before, according t0 Zillow.

While rental declines across Canada have been modest, Fochs said it offers some hope to those seeking more affordability.

“The outcome of all of this stuff happening is more affordable housing, which means that young people stop feeling hopeless,” he said, adding that there’s some rise in “optimism” as a result of falling rents.