The latest Canadian rental vacancies data from CMHC highlights a troubling trend for renters nationwide. While vacancy rates have increased, rents continue to grow faster than wages, maintaining the country’s affordability crisis. According to CMHC’s 2025 Rental Report (CMHC), the national vacancy rate surged to 3.1% in October 2025, up from 2.2% in 2024, representing the highest level in four years. Although more units are available, rental prices continue to climb, putting additional strain on renters’ budgets.
Vacancy Rates Hit New Highs in Major Cities
Toronto and Vancouver are leading the recent vacancy surge. Toronto’s vacancy rate reached 3.0%, the highest since the pandemic, while Vancouver’s soared to 3.7%, marking the highest level in 25 years (Better Dwelling). Surprisingly, cities traditionally considered more affordable, like Halifax and Montreal, saw smaller vacancy increases but continuing rent pressure. The rise in supply has not translated into significant relief for tenants, emphasizing the persistent gap between rent growth and wage increases.
You can also check our blogs about Why Rental Replacement Rules Matter: Toronto’s One-for-One Policy Explained and Why Canada’s Housing Market Recovery Remains Stalled: Jobs, Trade & Interest Rates.
Rental Prices Continue to Outpace Wages
Despite rising vacancies, rental costs continue their upward trajectory. The average cost of a 2-bedroom apartment in Canada reached $1,550 in 2025, a 5.1% increase from 2024, while average wages rose only 3.5% during the same period. This imbalance underscores the continuing challenge of affordability for renters, especially in high-demand urban centres. Even as more purpose-built rentals come online, the pace of income growth has not kept up, leaving many Canadians struggling to save while paying escalating rents.
Factors Driving the Vacancy and Rent Trends
Several factors contribute to this seemingly paradoxical situation:
- New rental completions are increasing supply but not fast enough to offset demand pressures.
- Immigration and international student flows temporarily boosted occupancy in 2022–2023 but are stabilizing.
- High demand in urban centres like Toronto and Vancouver keeps rents elevated despite more units becoming available.
- Smaller cities with traditionally lower rents are seeing faster-than-expected rent growth due to migration and limited job opportunities.
These dynamics mean that while vacancies are rising, affordability challenges remain acute. (Better Dwelling)
Implications for Renters and Investors
For renters, the trends suggest that even with higher vacancies, affordable units are difficult to find. Relocating to smaller markets may not offer much relief due to constrained wages and employment opportunities. For real estate investors, the ongoing gap between rents and wages indicates stable cash flow potential in core urban markets, despite higher vacancy rates. Those evaluating purpose-built rental projects can leverage vacancy data to identify investment opportunities in cities where demand remains resilient.
For more insights on Canadian rental markets and investment trends, visit CondoTrend’s analysis of GTA rental properties → CondoTrend Rental Insights.
Future Outlook
CMHC predicts that the influx of new rental completions in 2026 may help stabilize prices and ease some affordability pressures. However, given the pace of wage growth, rents are likely to continue outpacing income for the foreseeable future. Market observers suggest that policy interventions targeting rent affordability and housing supply expansion may be necessary to prevent further strain on Canadian households.
Why are Canadian rental vacancies rising while rents continue to increase?
Vacancy rates are rising due to new rental supply, but rents still outpace wages because demand remains strong in high-cost urban centres and wage growth has been slower than rent increases.
