Canada Housing Market

According to the Rentals.ca March 2026 Rent Report, the average asking rent in Canada fell to $2,030 in February, marking a 33-month low and the 17th consecutive month of year-over-year rent declines across the country.

While rents remain historically elevated compared to pre-pandemic levels, the recent data suggests that rental prices are now softening in many of Canada’s most expensive markets. In several cities and suburban regions, rents have dropped sharply over the past year, with some areas experiencing double-digit price declines.

Average Rent in Canada Falls Again in 2026

Nationally, the average asking rent across all residential property types declined 2.8% year-over-year in February 2026.

Monthly rents also fell 1.3% compared to January, marking the largest February decline since 2020.

Average asking rents by unit type in Canada now sit at:

• $1,564 for studios
• $1,781 for one-bedroom units
• $2,162 for two-bedroom units
• $2,486 for three-bedroom units

Despite the recent decline, rents remain 2.3% higher than February 2023, showing that the market is cooling rather than collapsing.

The Cities Where Rent Prices Are Falling the Fastest

Some of the most significant rental price corrections are now appearing in suburban areas near Canada’s largest housing markets.

These regions saw especially rapid rent growth during the pandemic housing boom and are now experiencing some of the steepest declines.

According to the report, the cities with the fastest falling rents include:

Oakville, Ontario

Average rent decline: −14.6%

Oakville saw one of the largest rental price drops in Canada. After experiencing significant rent increases during the post-pandemic migration wave, the market is now adjusting as affordability pressures limit what tenants are willing or able to pay.

Surrey, British Columbia

Average rent decline: −11.3%

Surrey remains one of the fastest-growing cities in Metro Vancouver, but rents have dropped significantly over the past year as new rental supply enters the market and tenant demand stabilizes.

Vaughan, Ontario

Average rent decline: −11.0%

Located just north of Toronto, Vaughan also saw a sharp correction. Rapid condo development and changing renter demand appear to be pushing prices lower compared to the peak rental market conditions seen in recent years.

Kanata, Ontario

Average rent decline: −10.1%

Kanata, part of the Ottawa metropolitan area, also recorded double-digit rent declines as rental inventory increased and the local market adjusted to new pricing realities.

New Westminster, British Columbia

Average rent decline: −12.8%

This Metro Vancouver suburb also saw significant rent decreases, reflecting broader softening across several suburban markets in B.C.

Why Suburban Rental Markets Are Seeing the Biggest Drops

The largest rent corrections are happening in suburban areas that experienced rapid price growth earlier in the housing cycle.

Several factors are contributing to this shift:

• Pandemic migration trends are stabilizing, reducing demand in some suburban markets
• New rental supply is entering the market, particularly in condo-heavy regions
• Renters are reaching affordability limits, forcing landlords to adjust pricing
• Economic uncertainty and interest rates are impacting investor behaviour

Many of these communities saw significant rent growth between 2021 and 2023, which means they also have more room for downward adjustments.

Condo Rentals Are Seeing the Biggest Declines

The report also found that condominium rental units experienced the steepest price declines nationally, with rents falling 5.1% year-over-year.

By comparison:

• Purpose-built rental apartments declined 1.9%
• Secondary market rentals declined 4.5%

Condo rentals tend to be more sensitive to market shifts because they are often owned by individual investors rather than large institutional landlords. When vacancies rise or tenant demand weakens, condo owners may lower rents more quickly to secure tenants.

Smaller Units Are Falling Faster Than Family Rentals

The rental slowdown is also affecting different unit sizes differently.

Across Canada:

• One-bedroom rents fell 3.5% year-over-year
• Studio rents declined 2.2%
• Two-bedroom rents declined 1.1%

Meanwhile, three-bedroom rents increased 0.6%, reflecting strong demand for family-sized units where supply remains limited.

This suggests that while smaller units may be facing downward pricing pressure, larger homes remain in relatively high demand.

Rent Affordability Is Slowly Improving

Another notable shift in the report is that rental affordability has improved slightly for Canadian households.

The rent-to-income ratio fell to 29% in February 2026, down from 31% a year earlier and 34% two years ago.

The income required to afford the average rent also declined to $81,213, compared with $83,513 in 2025 and $87,728 in 2024.

Although this represents progress, rents remain elevated in many major cities, meaning affordability challenges have not fully disappeared.

What This Means for Renters in 2026

For renters, the latest data suggests that negotiating power may slowly be shifting back toward tenants in some markets.

With rents declining in several regions, renters may begin to see:

• more price competition among landlords
• increased availability of rental listings
• potential incentives such as free months or discounted rents
• greater flexibility in lease negotiations

However, conditions vary widely by location, and some markets remain extremely competitive.

What This Signals for Canada’s Rental Market

Canada’s rental market appears to be entering a new phase after several years of rapid price growth.

The 33-month low in national rents suggests that affordability pressures are now shaping the market more strongly than supply shortages in the short term.

But while prices are cooling in many regions, demand for housing remains structurally strong due to population growth, immigration, and limited housing supply.

That means rent trends in 2026 will likely continue to vary widely across different regions and property types.

What This Signals for Canada’s Housing Market

The rental market often acts as an early indicator for broader housing trends.

Falling rents can influence:

• investor demand
• development decisions
• housing affordability policies
• migration patterns between cities

If rental prices continue declining throughout 2026, it could signal that Canada’s housing market is entering a more balanced phase after years of extreme pressure.

For now, however, the data shows that Canada’s rental market is cooling – but not collapsing.

References

Rentals.ca & Urbanation. (2026, March). Rentals.ca March 2026 rent report. Rentals.ca.