Canada’s rental-apartment market saw a notable slowdown in rent growth in 2024, says a new Canada Mortgage and Housing Corporation (CMHC) report.

The average rent for a two-bedroom apartment rose 5.4%, down from a record 8% in 2023, according to CMHC.

But rent growth for newly leased units remained unchanged from 2023 at 23.5%.

The report also highlights a significant rise in rental supply, which contributed to the easing of rent increases. The number of purpose-built rental apartments grew by 4.1%, marking the highest annual increase in more than 30 years.

The surge pushed the national vacancy rate to 2.25% in 2024 from 1.5% in 2023.

“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.”

Toronto experienced the slowest rent growth among major markets, with a 2.7% increase, down from 8.8% in 2023. The city’s rising vacancy rates and historically low turnover rates led landlords to focus on tenant retention, resulting in more cautious rent hikes.

In Montreal, rental completions remained among the highest on record, pushing vacancy rates higher. Meanwhile, Vancouver saw rental-supply growth slow compared to the previous two years but still exceed historical averages. Despite these trends, high demand kept rent growth relatively strong in both cities.

Calgary, while experiencing a significant slowdown in rent growth, continued to outpace other major urban centres due to strong demand driven by migration-led population growth and a stable economy, despite rising unemployment.

Halifax saw a major shift in its rental market, with vacancy rates rising to 2.1% in 2024. The city also recorded the largest year-over-year drop in rent growth among major markets, with rents increasing just 3.8% in 2024 compared to 11% in 2023.

In contrast, Ottawa and Edmonton bucked the national trend, seeing slight accelerations in rent growth in 2024. This situation was largely attributed to higher rent increases for new tenants and newly completed units entering the market.

CMHC’s report underscores the importance of continued investment in rental housing to ensure affordability and stability in Canada’s housing market. While vacancy rates have edged closer to historic norms, the demand for rental units remains high, particularly in urban centres.

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