Slower immigration, rising construction ease Canada’s rental squeeze in 2025: report

After years defined by intense competition and record-low vacancy rates, Canada’s rental market is beginning to show signs of easing.

A new report from Liv.rent says rising housing supply, combined with slower immigration and fewer temporary residents, is shifting market dynamics in several major urban centres. 

“Markets that faced years of overwhelming pressure are now showing early signs of rebalancing,” the report says, adding the shift is giving renters more choice while forcing landlords to adjust.

Slower immigration reduces pressure

The report points to the sharp slowdown in immigration in 2025 as a major factor easing rental demand.

Newcomer arrivals fell 19 per cent in the first half of the year, with the decline widening from 14 per cent in the first quarter to 23 per cent in the second, according to the report.

Ontario, Alberta and British Columbia saw the largest drops. Compared with the previous year, Ontario welcomed more than 15,000 fewer newcomers, Alberta saw 8,167 fewer arrivals, and B.C. recorded a decline of nearly 7,000.

B.C. is also seeing more people leave the country. The report says the province posted an 18 per cent increase in emigration, particularly in the first quarter of 2025, further reducing housing demand.

More housing comes online

At the same time, housing supply has continued to rise.

National housing starts increased 5.5 per cent year over year through the first three quarters of 2025, climbing from 169,037 units to 178,366, the report says.

Growth was led by semi-detached homes, which rose 15 per cent, and apartments, up eight per cent. Starts declined for single-detached homes, down three per cent, and row units, down two per cent.

Ontario remained the country’s largest source of new construction, with more than 48,000 starts through the first three quarters. The province also led apartment construction, including 13,205 apartment starts in the third quarter alone, the highest quarterly total of any province.

Alberta continued to dominate single-detached construction, recording 3,279 starts in the first quarter, 4,513 in the second and 4,309 in the third.

Vacancy rates climb

As new units enter the market and demand cools, vacancy rates are rising, particularly in purpose-built rental buildings.

According to CMHC, the national vacancy rate for purpose-built rentals rose to 3.1 per cent in 2025, up from 2.2 per cent in 2024 and above the 10-year average.

In Vancouver, vacancy rates reached 3.7 per cent, the highest level since 1988. Rent growth in the city slowed to what the report describes as a two-decade low.

The report notes purpose-built rentals have become more expensive than many secondary-market options and says shifting supply and population trends are changing renter behaviour.

Renters move more freely

Turnover rates are also rising, a sign renters are moving more often and exploring their options.

The report says increased housing supply, combined with economic uncertainty and stagnant wage growth, is giving renters more flexibility in a market that has long favoured landlords. Higher emigration levels are also contributing to increased availability as units return to the rental pool.

Affordability remains a challenge

Despite these changes, the report cautions affordability pressures remain.

Housing and living costs continue to outpace wage growth, limiting financial flexibility for many renters. The report notes slower rent growth offers only limited relief, as savings are often offset by higher costs elsewhere amid persistent inflation and broader economic weakness.

While the data point to a cooling market, the report suggests the adjustment is uneven and still unfolding, with outcomes varying by region and rental type.