Growth eases rent increases and raises open rates in 2024
The supply of purpose-built rental apartments in Canada reached its highest growth rate in over three decades, providing some relief to renters struggling with affordability.
The 4.1% increase in purpose-built rental apartments in 2024 helped push the national vacancy rate up to 2.2% from 1.5% in 2023, according to the latest Rental Market Report (RMR) from Canada Mortgage and Housing Corporation (CMHC).
Despite these gains, affordability challenges persist, particularly for new tenants facing steep rent hikes when units turn over.
Average rents for a two-bedroom apartment rose by 5.4% in 2024, a significant drop from the record 8% growth in 2023. However, rent hikes for units leased to new tenants remained unchanged at a steep 23.5%.
CMHC deputy chief economist Tania Bourassa-Ochoa (pictured) highlighted ongoing issues in the rental market.
"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,'' Bourassa-Ochoa explained in the report.
She added that the record-breaking growth in rental supply helped to slow average rent increases and push vacancy rates closer to historical norms.
The national vacancy rate for rented condominiums held steady at 0.9%. Average rents for a two-bedroom unit rose to $2,173 in 2024, up from $2,049 in 2023, reflecting the challenges faced by tenants in this segment.
Regional growth
Toronto experienced the lowest rent growth among major markets, with average rents increasing by just 2.7%, down from 8.8% in 2023. This slowdown was attributed to higher vacancy rates, a record surge in new rental supply, and landlords focusing on tenant retention by limiting rent increases.
Meanwhile, Calgary maintained the highest rent growth among large urban centres, driven by migration-led population increases and a stable economic backdrop. While rent growth slowed from the previous year, it remained the fastest in the country.
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Montréal recorded one of its highest-ever levels of rental apartment completions, driving up vacancy rates. Vancouver's rental supply grew at a slower pace than in recent years but remained above historical averages. In both cities, strong demand kept rent growth from slowing as much as in Toronto.
Halifax experienced relief as strong rental supply growth and slower population growth eased market pressure. The vacancy rate rose to 2.1%, while average rent growth dropped significantly to 3.8%, down from 11% in 2023.
In contrast to other markets, Ottawa and Edmonton saw slight accelerations in rent growth during 2024, driven primarily by higher rents for newly completed units and turnover.
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