00:00:00:00

[Audio: Upbeat rhythmic music plays.]

[Visual: In a recording studio, Joelle Hamilton and Tania Bourassa-Ochoa sit in armchairs, facing each other. Joelle has dark brown shoulder-length hair and wears a black dress, while Tania has long blonde hair and wears an orange blouse with a black pantsuit. They each have a microphone on a stand and a table on either side of their chairs. The perspective shifts from close-ups to a profile of both.]

Joelle Hamilton: What is happening in Canada's rental market?

00:00:03:00

Tania Bourassa-Ochoa: Record levels of supply that have been hitting the market.

00:00:06:00

Joelle: Can you unpack the drivers for us?

00:00:08:00

Tania: A lot of that is due to government support, so programs and products to help incentivize more construction of purpose-built rentals. There are more units available. Landlords are giving a little bit more incentives.

00:00:21:00

Joelle: Where is the rental market going next?

00:00:24:00

Tania: So a lot of supply coming in. Demand will potentially continue to be weak. And also expect tenants to be a little bit more mobile.

[Audio: Theme music plays.]

[Visual: On a dynamic red-blue background, translucent black shapes form a row of houses oriented in all directions. A translucent white box with a magnifying glass symbol on the right appears at the centre. White text inside the box reads, "canada's housing market.”]

00:00:36:00

Joelle: You’re listening to In House, Canada's Housing Podcast, where we share the latest on Canada's housing market.

[Visual: The text box disappears and the row of houses multiplies into three. The houses deconstruct, reconstruct and reorient themselves. At the centre, white text reads, "In-House - Canada's Housing Podcast."]

[Visual: Joelle and Tania sit in the studio.]

[Visual: A box that reads "Joelle Hamilton, Communications and Marketing - CMHC" appears briefly.]

Joelle: Vacancy is rising, rents are shifting, and for the first time in years, renters have a little more breathing room. But is relief here to stay? Welcome back to In House, the podcast where we break down the forces shaping housing in Canada. I'm your host, Joelle Hamilton. Today, we're unpacking CMHC's 2025 Rental Market Report, which is the most comprehensive look at rental conditions in major cities across the country. We'll cover why conditions have softened after years of intense pressure, what's changed in demand, supply, affordability, and regional trends. Joining me in the studio today is Tania Bourassa-Ochoa, one of CMHC's deputy chief economists. Welcome back, Tania.

00:01:36:00

Tania: Thank you, Joelle.

00:01:37:00

Joelle: I’d like to start by getting the big picture of what is happening in Canada's rental market.

00:01:44:00

[Visual: A box that reads "Tania Bourassa-Ochoa, Deputy Chief Economist — CMHC" appears briefly.]

Tania: Yes, so we are seeing our vacancy rate rise in Canada. We went from 2.2% to 3.1% this year. It's actually above our 10-year average, basically. There are two major forces at play right now. On one hand, rental supply: record levels of supply that have been hitting the market in the last few years. This year again, record level of completion. A lot of new units are coming online. Developers have really been working their way to meet that strong demand that we’ve had in the past few years. So that's on one side. On the other side, we have demand, which has been slowing down actually this year. A few reasons: slower population growth, international students as well, fewer of those. And the job market as well has been slowing down. A lot of elements that are contributing to a slower demand. So more supply, less demand. But what that means for tenants is that there are more units available. On the other hand, however, landlords are definitely competing a lot more to be able to rent out those units. We're seeing a lot more incentives that are being offered, like one free month, two free months. So all these different types of incentives help attract new tenants. There are a few interesting things this year. One of them is that our vacancy rate. The driver of that vacancy rate was not only in the high end, but really across the different rent levels. Even the lowest rent levels contributed a little bit to that increase in the vacancy rate. That being said, there is a lot more demand for these more affordable units, which brings us to the affordability component. Affordability is still challenging. We are seeing some signs of easing in some of the high-priced markets, but overall, rental affordability is still there.

00:03:59:00

Joelle: So now that we know what's happening at a higher level, I'd like to get into a little bit more detail about what's driving these changes. Can you unpack the drivers for us?

00:04: 11:00

Tania: Yes, of course. On one hand, we have demand. We talked about slower population growth. A lot of that has resulted from recent immigration policy changes — and so a lot less new arrivals, or new people arriving in Canada. And that's a major factor because that is a big element of rental demand. Less international students as well. So when we see the number of work permits — work permits and student permits for people aged between 15 and 34 — we see a quite significant drop there. And that is, again, impacting our rental markets even more specifically or more intensely in regions that are around universities, for example. And then the other factor is employment. So when we're looking at employment, it has been easing quite a bit. Unemployment is on the rise, but specifically for youth — our younger population, which is really seeing higher levels of unemployment. And this is a major impact, because a lot of these younger people are just maybe staying at home longer, are not necessarily creating their own households and going out to rent apartments. These three factors are really influencing the demand side. And on the other side, on the supply side, record levels of supply — multi-year record levels of completions that have been coming into the markets. A lot of that is due to government support. All three levels of government really have put out programs and products to help incentivize more construction of purpose-built rentals. Even mortgage insurance has helped to support that as well. But an important nuance, though, is that a lot of these units that are coming on the market are maybe on the higher end or maybe a little bit more expensive. We're really seeing that in that space more landlords are either giving out those incentives or readjusting rents. It's really two forces that are playing against each other in some way. That is really the main cause of why our vacancy rate and our rental markets are easing.

00:06:36:00

Joelle: How does that kind of play between supply and demand play out on the ground? I'd like to look more regionally, like what's happening in Canada's six biggest cities.

00:06:48:00

Tania: Regionally speaking, I think it's a very interesting story because we're seeing a lot of divergence between the different regions. First of all, Alberta is definitely standing out. Looking at Calgary, we're seeing that the vacancy rate stood around 5% despite a record level of supply that has been coming in, a surge of 11%. But demand has been strong. There's been a lot of migration that has been steady, slowed a little bit, but still sufficient enough to keep the vacancy rate at the same level. In Edmonton, vacancy rates rose to 3.8%, but it's mostly in the high-end markets. Looking at Ontario now, I think Ontario really felt that pinch. One of the reasons is really that international students decreased, but also tariff-exposed cities have been affected by unemployment as well. In the Greater Toronto Area, we're seeing an increase in vacancy rate on the purpose-built rental side. There is this strong dynamic between the condo market and the purpose-built rental market that is at play as well. But when we look at the condo rental market in Toronto — and this is rental, of course — the vacancy rate has remained very low, close to 1%. Montréal tells a different story. The average rent grew by 7.2%, which is actually stronger than what we saw last year. Looking at income, income has not been as strong, and so affordability has actually worsened in Montréal. Part of the driver of that increase in rents is the new guidelines from the Tribunal administratif du logement, so record levels of those guidelines at around 5%, and so that definitely incentivized landlords to push the rents up a little bit more, even for occupied units. In Halifax, vacancy rates did tick up and we saw a rent increase of 6.7%, so that was mainly driven by rent caps and by higher turnover rents as well, but also just higher-priced units that have been coming into the market as well.

[Visual: A box with text that reads "SUBSCRIBE" next to a ringing bell symbol appears briefly.]

In Vancouver, vacancy rates are actually reaching a historical high. We haven't seen these levels in over 30 years, even surpassing pandemic-era peaks that we observed. The main reason for that is just record levels of purpose-built rental completions, but also a lot of condominiums that are coming in for rent, basically. And so all of that supply is really pushing the vacancy rate to those levels in Vancouver.

00:09:48:00

Joelle: So with all these shifts that we're seeing, and you touched on this a little bit in the national overview section, I want us to dive in just a little bit deeper to find out exactly what these shifts mean for renters and then for landlords.

00:10:05:00

Tania: In terms of affordability, if we ask ourselves the question, are tenants finally getting that relief? The answer is yes and no — to some extent in some of the higher-priced markets, but also in those higher levels and the higher segments. That being said, at the lowest levels of income, there's not a lot of relief there, and that is really where most of the pressure is. There are a few positives. One: more units are available, so tenants have more choice. That's the case when we're looking at Toronto, Calgary or even Edmonton, so definitely more choice. When we're looking at negotiation power as well. Like we talked about a little bit earlier, landlords are giving a little bit more incentive, one free month, two free months, free appliances, moving allowances. This is becoming a little bit more common. And then turnover rents have declined, so that's an important one because when we look at the results from last year, turnover rents — basically rents for where there's a new tenant coming into the unit — that was really driving rent growth. We're actually seeing that decline compared to the levels of last year. It does still mean that new tenants are paying more than sitting tenants, but that being said, we're seeing a little bit of a decline there.

00:11:42:00

Joelle: We talked about the impact of these shifts on renters and landlords. And now I'd like to know, how should policymakers interpret this year's results?

11:53:00:00

Tania: That’s a great question. I think policymakers should really be understanding that our rental market is evolving, that challenges are still very persistent. I think there are two takeaways. First of all, the need for sustained rental supply to keep coming into the market. It's important to ensure stability, it's important to ensure diversity, so we shouldn't be scared of seeing increasing vacancy rates and or put a pause on this new supply coming in, but rather we need to continue seeing supply coming in. That's one thing, and the other thing that I think is very important to monitor is the difference between the average rent — the non-turnover and the turnover rent, basically — because that gap between the two is a very good indicator of market stress. When it increases a lot, that means that for movers or for newcomers, there is a lot of pressure on affordability. Those are the two things I think are worth taking a closer look at.

00:13:12:00

[Visual: A box with text that reads "SUBSCRIBE" next to a ringing bell symbol appears briefly.]

Joelle: Let’s wrap this episode with what Canadians can expect. Where is the rental market going next?

00:13:20:00

Tania: If we look at what is currently in construction, we have very high levels of supply that is being built, that will be coming online over the next year, in a few months, basically. So a lot of supply coming in. Demand will potentially continue to be weak, so we could expect vacancy rates to continue increasing. We could expect rent growth to continue to slow down. So that may give a little bit more breathing room and improve affordability slightly. That is, if income growth is still present, obviously. We could also expect to continue seeing regional divergences and also expect tenants to be a little bit more mobile. So we're seeing more turnover, we're seeing that tenants are moving more because of these incentives that landlords are giving out, because there's a little bit more choice. And so we could expect a little bit of that going on. And that filtering effect that we were talking about earlier where some tenants are potentially moving into these higher-priced units — we could expect to continue seeing that.

00:14:40:00

Joelle: So that's actually a wrap on today's episode, Tania. Thank you so much for coming into the studio and walking us through the key trends that we're seeing in Canada's rental market this year. And thank you to our viewers for joining us In House. Catch you next time.

[Visual: On a dynamic red-blue background, three rows of translucent black houses deconstruct, reconstruct and reorient themselves in all directions. In the foreground, white text reads, "In-House - Canada's Housing Podcast.”]

Joelle: Did you know we're not just on YouTube?

[Visual: The white text slides up and disappears, replaced by white logos for Spotify, Apple Podcasts and Amazon Music.]

Joelle: You can now find us on Spotify, Apple Podcasts, and Amazon Music.

[Visual: The logos slide up and disappear, replaced by white text that reads, "Don't miss our next episodes!" Three translucent white rectangles reading "Share, Follow" and "Subscribe" appear below the text. Then, the rectangles become solid sequentially and the letters turn transparent.]

Joelle: Don't miss our next episodes for more real, data-driven discussions. If you're learning from and or enjoying this podcast, please share this episode, follow us, or subscribe. Reach out, let us know what you think.

[Visual: The text and boxes disappear, replaced by white text that reads, "See you next time!"]

Thanks for listening and see you next time.

[Visual: The CMHC logo and Canada wordmark appear on a white background.]