Rental vacancy rate jumps as builders deliver more supply

Key Takeaways:

• Vacancy rates rose across major Canadian cities due to record rental supply completions and slower population growth, marking a shift from years of tight market conditions.
• Landlords increasingly used incentives such as free rent months and moving allowances to compete for tenants, though overall affordability remained strained as rents continued to climb.
• Toronto, Vancouver, Montreal and several other cities saw notable vacancy increases, while Calgary held steady and Edmonton, Ottawa and Halifax experienced rising vacancies alongside continued rent growth.

The Whole Story:

Canada’s purpose-built rental vacancy rate climbed to 3.1% in 2025, up from 2.2% the previous year and above the 10-year national average, driven by record housing completions and slower population growth, according to the Canada Mortgage and Housing Corporation’s 2025 Rental Market Report.

The increase marks a significant shift in rental market conditions after years of tight supply. Major cities including Toronto, Vancouver, Montreal, Calgary, Edmonton, Ottawa and Halifax all saw vacancy rates rise as landlords competed harder to attract tenants through incentives such as free rent months, moving allowances and signing bonuses.

Despite easing vacancy, affordability remains strained. Average rents for two-bedroom units rose 5.1% nationally, driven partly by higher repricing at lease turnover. Rental condominium apartment vacancies increased but remained well below purpose-built levels.

“The tight conditions that defined rental markets in the past few years in Canada’s largest cities loosened in 2025. Historically high rental supply completions combined with weaker demand caused by slower population and economic growth led to a rise in vacancy rates in many large cities,” said Tania Bourassa-Ochoa, CMHC’s Deputy Chief Economist, in a news release. “Purpose-built rental operators responded to these market conditions by offering incentives to new tenants, such as a month of free rent, moving allowances and signing bonuses. However, affordability is still a challenge in most markets, as the supply of units affordable to lower income households remains low.”

Toronto’s purpose-built vacancy rate reached 3% for the first time since the pandemic, reflecting declining immigration and reduced demand from international students. Vancouver recorded its highest vacancy rate since 1988 at 3.7%, with rent growth at a two-decade low. Montreal saw vacancy rates rise due to fewer non-permanent residents, though average rents grew 7.2%, outpacing income growth.

Calgary’s vacancy rate held steady at 5% as robust demand kept pace with record rental supply growth. Edmonton’s purpose-built vacancies increased to 3.8% despite steady migration, while over 2,000 rental condominiums were added to the market. Ottawa’s vacancy rate rose to 3%, with newly built units showing the highest vacancy at 6.7%. Halifax saw slight increases as migration slowed and supply grew, though rents still climbed 6.7%.

The CMHC report also covers rental market conditions in Victoria, Regina, Saskatoon, Winnipeg, Hamilton, Kitchener–Cambridge–Waterloo, Windsor, St. Catharines–Niagara, London, Gatineau and Québec, as well as all urban areas with populations of 10,000 or more.