Historic rental supply growth raises Canada’s vacancy rate

Ottawa, December 17, 2024

Although rental market conditions remain tight across most major markets, Canada’s supply of purpose-built rental apartments grew by 4.1%, the highest increase in over thirty years, pushing the national vacancy rate from 1.5% in 2023 to 2.2% in 2024. This is one of the key findings from the latest Rental Market Report (RMR) released by Canada Mortgage and Housing Corporation (CMHC).

Additionally, the average rent growth for a 2-bedroom apartment saw a significant slowdown in 2024, as rents rose 5.4% for a 2-bedroom unit, down from a record 8% in 2023. However, when a unit turned over to a new tenant, rent growth was 23.5% in 2024, unchanged from 2023.

The rented condominium apartment market also remained tight in 2024. The average vacancy rate for rented condominiums in the 17 census metropolitan areas (CMAs) surveyed by CMHC remained at 0.9% in 2024, unchanged from 2023, and down from 1.6% in 2022. Average 2-bedroom rent was up to $2,173 in 2024 from $2,049 in 2023.

Read the full Rental Market Report on the CMHC website.

Quote:

“Affordability for Canadian renters remains a challenge, particularly for new tenants who faced significant rent hikes as units turned over, limiting mobility for existing tenants and making it harder for prospective tenants to enter the market.’’said Tania Bourassa-Ochoa, CMHC’s Deputy Chief Economist. “However, record growth in rental supply helped slow down average rent growth and raise vacancy rates closer to the historic average, underscoring the critical role of added supply in improving housing affordability.”

Report highlights:

Toronto had the lowest rent growth among major CMAs at just 2.7%, down from 8.8% in 2023. This is the result of rising vacancy rates and the lowest turnover rate of the major CMAs, which declined further in 2024. With a record increase rental supply, landlords prioritized tenant retention by taking a more cautious approach to rent increases.
In Montréal, rental apartment completions remained among the highest on record, pushing vacancy rates higher, while in Vancouver, rental supply grew at a slower pace than the previous two years but still above historical rates. In both markets though, persistently high demand meant rent growth didn’t slow as much as it did in Toronto.
While Calgary's rent growth slowed significantly in 2024 it still outpaced all other large urban centres due to strong demand for rentals, driven by migration-led population growth and stable economic conditions, despite higher unemployment.
In Halifax, strong rental supply growth and slower population growth relieved some of the pressure in the rental market. As a result, the vacancy rate saw significant growth to 2.1% this year, while average rent growth saw the largest year-over-year decrease of the major markets, down to 3.8% in 2024 from 11% in 2023.
Ottawa and Edmonton differed from the other major markets as rent growth in 2024 slightly accelerated, primarily driven by higher rent increases for new tenants at turnover and in newly completed units entering the market.