Analyzing the Cooling Trend in Canada's Rental Market Amid Economic Challenges

Overview of Canada's Rental Market Trends

In the latest report by Yardi® Canada, the multifamily rental landscape is undergoing significant changes. The Q2 2025 report, which analyzes data from Q1 2025, has revealed some concerning trends for landlords and tenants alike. Despite steady demand in various markets, a rise in supply alongside economic uncertainties has affected the rental dynamics deeply.

Key Findings from the Q2 2025 Report

1. Rising Vacancy Rates: The national vacancy rate has increased to 4.0%, marking a 40 basis point rise from the previous quarter. This figure is the highest recorded since 2020 and signals mounting pressures on the rental market.
2. Slowdown in Rent Growth: During Q1 2025, rent growth was disappointingly minimal, with in-place rents experiencing an average increase of just $17 across the country. Lease-over-lease growth has also dropped to only 4.0%, further emphasizing the cooling market conditions.
3. Steady Turnover Rates: The national turnover rate increased slightly to 23.4%, keeping historically low patterns but indicating that tenants might be moving, influenced by the rising vacancies.
4. Increased Supply: There has been a notable surge in apartment deliveries, with a 32.4% year-over-year increase in 2024. Alberta stands out with an incredible 108.5% rise in completions, highlighting shifts in regional supply.

Regional Insights

Interestingly, the report indicates that specific unit types, particularly bachelor units, are experiencing the highest vacancy rates nationwide. A striking example is Calgary, which currently has the most alarming vacancy rate among all Census Metropolitan Areas (CMAs) at a staggering 7.4%. This trend could be attributed to various factors, including economic shifts and changes in local demographics.

Peter Altobelli, Vice President and General Manager of Yardi Canada, stated, "While Canada's rental market remains fundamentally sound, we're entering a new phase marked by slower rent growth and shifting demand. Market dynamics are evolving in real-time, and it's more important than ever for industry leaders to monitor emerging trends and plan accordingly." This echoes concerns voiced by many investors and property managers in the region who are actively seeking to adapt their strategies to these new realities.

Economic Factors at Play

Several external factors are influencing the rental market dynamics. Economic uncertainties are prevalent, and the introduction of new tariffs in the U.S. is causing ripple effects across borders, impacting supply chains and costs. These events have led to a cautious approach from both landlords and potential investors, making it crucial to understand the pulse of the rental market during such turbulent times.

Conclusion: What Lies Ahead?

As we look ahead, the evolving landscape of Canada's rental market presents both challenges and opportunities. While current conditions may pose difficulties for property owners, there is also potential for reinvention and innovation in the way real estate businesses operate in these changing times. Monitoring emerging trends effectively will be paramount for everyone involved—from investors to homeowners—to navigate this complex environment successfully. For detailed insights, the full report is accessible on the Yardi website.

Yardi, a global leader in property management software solutions, continues to develop innovative strategies for real estate companies worldwide. With over 10,000 employees, Yardi remains committed to driving transformation in the real estate sector.