Canadian Rental Prices Hit 20-Month Low

Recent data from Rentals.ca and Urbanation Inc. reveals a 4.8% year-on-year decline in rental prices, averaging CAD2,088 (US$1,458.50) last month. This marks the lowest figure since July 2023 and the steepest drop since April 2021, during the height of the Covid-19 pandemic.

Impact on Major Cities

Toronto and Vancouver, Canada's most expensive rental markets, have not been spared. Both cities report decreases in rental prices, attributed to an influx of newly built condominiums. Studio apartment rents in Vancouver and Toronto dropped by 5% and 6%, respectively.

Challenges for Preconstruction Buyers

The declining rental prices pose challenges for preconstruction buyers, with nearly 20,000 new condo units expected in 2025. Many face high closing costs and rental rates insufficient to cover mortgage payments.

Government Policies and Market Oversupply

The federal government's strategy to boost rental housing development has led to an oversupply in certain markets. The national rental supply saw its largest increase in 30 years, growing by 4.1%, with the vacancy rate reaching 2.2%.

International Student Visa Caps

Analysts link the rental market slowdown to caps on international student visas, estimated to reduce foreign student numbers by 45%. This policy change has significantly impacted rental demand, especially in college and university towns.

Conclusion: The Canadian rental market is undergoing significant changes, with prices dropping to a 20-month low. Factors include an oversupply of rental units and reduced demand due to caps on international student visas.