The latest Canada Mortgage and Housing Corporation (CMHC) Rental Market Report, released in December, sheds light on various shifts in Canada’s rental landscape, including the critical role that condominiums have played in boosting the rental supply, particularly in markets like Toronto and Vancouver. As rental conditions remain tight across most major urban centers, new condominium apartment completions have been significant contributors to Canada’s rental stock.
Increase in Condominium Apartment Completions
One of the standout findings from CMHC’s report is the significant rise in condominium apartment completions, particularly in cities like Toronto and Vancouver. As more investor-owned condominium units entered the rental market, there was an impact on the available rental supply. In Toronto, the rental share of condominiums reached an all-time high of 41%, driven by a surge in investor-owned units coming into the market. As resale conditions became less favourable, investors chose to lease their units instead of selling.
In contrast, Vancouver also saw an increase in the rental share of condominiums, though it was more modest compared to Toronto. The resale market in Vancouver remained more balanced, allowing more investors to sell their units upon completion rather than leasing them, contributing to a lower share of rental condominiums.
Declining Rental Condo Shares in Calgary and Edmonton
Meanwhile, Calgary and Edmonton experienced the opposite trend. In these markets, rising demand for homeownership, coupled with favourable conditions for sellers, led to a decrease in the rental share of condominiums. With housing demand spiking and interest rates influencing purchasing decisions, more investors were incentivized to sell their units instead of leasing them. The financial attractiveness of selling during a competitive real estate market led to fewer rental condos entering these markets, which is reflected in the declining rental condo share in both Calgary and Edmonton.
Vacancy Rates and Rent Trends
The condominium rental market itself showed little fluctuation in terms of vacancy rates. As of 2024, the average vacancy rate for condominium units in the 17 CMAs surveyed by CMHC remained very low at 0.9%, unchanged from 2023. The number of units on the rental market remained limited, helping to maintain tight rental conditions.
While rent growth for new condominium units remained high at 5.4% for a two-bedroom in 2024, a slight slowdown was observed when compared to the previous year’s 8% growth. However, turnover rents, or those charged when units changed tenants, saw a massive increase of 23.5% across. This trend was particularly pronounced in cities like Toronto, which has rent cap restrictions, where rents for new tenants jumped sharply, with some rents rising up to 40.7%, contributing to difficulties for new renters to enter the market and creating further strain on existing tenants looking for stable housing.
Supply
As Canada’s rental market faced tight conditions across many large cities in 2024, condominiums emerged as a significant factor in the rental supply growth. It is important to note, however, that there was record-breaking growth in purpose-built rental apartments of 4.1% in 2024, which was the highest in over 30 years.
