Canada’s rental market is showing early signs of relief on supply, but affordability remains firmly out of reach for many tenants. New data from the Canada Mortgage and Housing Corporation (CMHC) shows rental vacancy rates climbed sharply in 2025, reaching their highest level in four years. Despite this increase, rents continue to rise faster than wages, limiting meaningful relief for renters.
The latest CMHC Rental Market Report suggests Canada’s rental crisis is evolving rather than easing, shifting from a shortage of units to a deeper affordability problem.
Rental Vacancy Rate Hits a 4-Year High
Canada’s national rental vacancy rate rose to 3.1% in October 2025, up from 2.2% one year earlier, according to CMHC. While the increase may appear modest, it represents a rapid expansion in available rental units and marks the highest vacancy rate since the pandemic-era spike in 2021.
CMHC notes that vacant units have been growing roughly 40% faster than rental demand, reflecting a combination of improving supply and slowing population-driven demand.
Notably, the vacancy rate began rising in 2024, ahead of recent immigration caps. This suggests that new supply played a meaningful role, even as population growth continued to outpace long-term norms.
Toronto and Vancouver Lead the Vacancy Surge
Some of the largest increases in vacancies are occurring in Canada’s tightest rental markets.
- Toronto’s vacancy rate reached 3.0%, the highest level since the pandemic
- Vancouver’s vacancy rate climbed to 3.7%, the highest level since 2000
These figures represent a significant shift for two cities long defined by chronic rental shortages and intense competition among tenants.
Rents Keep Rising Despite More Availability
Despite higher vacancy rates, renters are still facing steep rent increases.
CMHC data shows the average two-bedroom rent reached $1,550 in 2025, rising 5.1% year-over-year. Over the same period, wage growth averaged roughly 3.5%, meaning rental costs continued to outpace income gains.
While rent growth has slowed somewhat in Toronto and Vancouver, CMHC observed faster price increases in traditionally more affordable markets such as Halifax and Montreal. As a result, the affordability gap between major cities and smaller centres has narrowed, making it harder for renters to improve their financial situation by relocating.
From Supply Crisis to Affordability Crisis
Canada’s rental market has made incremental progress on supply, but affordability remains the central challenge.
Rising vacancy rates may increase competition among landlords as a wave of new rental completions comes online in the months ahead. Whether this translates into meaningful rent moderation or simply slower rent growth remains uncertain.
For now, Canada’s rental market appears stuck in a transitional phase, where availability is improving but costs remain elevated and disconnected from wage growth.
The Bottom Line
Canada no longer has record-low rental vacancy rates, but higher supply has not yet delivered affordability relief. With rents still rising faster than wages, the rental crisis has shifted rather than disappeared.
The next test will come as new supply is absorbed and landlords are forced to respond to changing market conditions.
References (APA)
Canada Mortgage and Housing Corporation. (2025, December 11). Canada’s vacancy rate rises amid historically high rental construction (News release). https://www.cmhc-schl.gc.ca/media-newsroom/news-releases/2025/canadas-vacancy-rate-rises-amid-historically-high-rental-construction
Canada Mortgage and Housing Corporation. (2025). Rental market report: Major centres, 2025. https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/rental-market-reports-major-centres
Better Dwelling. (2026, January 2). Canadian rental vacancies soar, but rents still outpace wages. https://betterdwelling.com/canadian-rental-vacancies-soar-but-rents-still-outpace-wages-cmhc/
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