Landlords across Canada are increasingly offering such incentives, together with other common perks like free parking, pet fee waivers and relocation subsidies, to compete for brand new renters. After a post-pandemic spike in rental costs, real estate observers say the scales have tipped back in renters’ favor resulting from falling prices, higher emptiness rates and uncertainty in the true estate market overall.
“It’s a race to the bottom,” said Marco Pedri, a Toronto-based broker at Shoreline Realty who makes a speciality of leasing transactions. “We’re talking about the inventory of all these new buildings. These landlords are competing with each other and driving prices down.”
Rental supply is increasing as demand shifts to leasing
This trend looks set to proceed for much of this yr, especially after 2025 marked the second consecutive yr of record rental housing starts in Canada. Experts say more apartment completions are also expected this yr as projects wrap up, giving renters more selection. “The math currently works better for rental housing than for large home ownership projects,” said Mathieu Laberge, chief economist on the Canada Mortgage and Housing Corp..
But with so many latest offerings and falling prices, the query arises as as to if tenant demand will follow in 2026. Some real estate agents imagine this has already begun.
Tom Storey of Royal LePage Signature Realty said 2025 was one in all the largest years for leasing transactions for his team. He said demand for rentals has been picking up steam as fewer customers are willing to depart the sales market.
“It was clear to me that the need for real estate hasn’t changed, but in 2025 people were choosing to access it much more on the leasing side than on the buying side,” Storey said, adding that falling sales prices and lower rates of interest have also caused buyers to carry off while they wait for the market to “bottom out.”
“That seems to me to be one of the many reasons why people chose short-term rentals, because rental prices had also fallen. The initial rents in 2025 were lower than in 2024 and 2023.”
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Rents proceed to fall, but pressure on affordability stays
December 2025 marked the fifteenth consecutive month wherein average asking rents nationwide fell in comparison with the previous yr, in keeping with an evaluation by Rentals.ca and Urbanation based on listing data from Urbanation’s network. They say average asking rents in Canada fell 3.1% overall in 2025 and were down 5.4% in comparison with two years ago. In December, asking rents fell about 8% in Vancouver, 5% in Toronto and Calgary, 2% in Montreal and 0.5% in Ottawa on an annual basis.
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However, concerns about affordability remain. At $2,060, the common asking rent in Canada was 2.3% lower last month than a yr ago. But that is still almost 3% higher than the national average asking rent from three years earlier, in keeping with the report. Asking rents are also still around 14% above pre-pandemic levels in December 2019.
Giacomo Ladas, spokesman for Rentals.ca, said property managers at the moment are coping with a dual problem: There are many latest listings available and there may be a comparatively small pool of renters. While some renters still feel like they’re being priced out of the market, movement has also slowed after the federal government implemented an immigration cap that has curbed population growth. In the winter months, demand typically cools down, which results in each lower offer prices and various incentive offers.
“It’s also important to note that we still expect a lot more supply to come to market,” Ladas said, noting that there are currently about 180,000 units under construction across Canada. “Based on the end of last year, we had negative population growth, so we don’t expect demand to really pick up any time soon, but there is more supply on the way. That’s why we’re seeing an increase in vacancy rates.”
Economic uncertainty is dampening tenant and buyer movement
Meanwhile, the rental market last yr was not resistant to widespread economic uncertainty related to trade concerns that clouded Canada’s real estate outlook. Some local real estate authorities say the trade dispute has resulted in fewer resale transactions than initially forecast. Many would-be first-time buyers adopted a wait-and-see approach that continues to this present day, holding on to their rental properties somewhat than moving forward with their homebuying plans.
Likewise, tenants are less inclined to pay higher prices, Ladas said, regardless that developers pushed ahead with targeted rental projects and borrowed money to construct them before the tariffs took effect.
“People stayed in their rental properties longer and we didn’t see an increase in turnover rates,” he said. According to CMHC data, the common sales rent for two-bedroom apartments fell last yr in Vancouver, Calgary, Toronto and Halifax. The National Housing Authority said the emptiness rate for purpose-built rental housing was 3.1% within the autumn, up from 2.2% at the identical time in 2024 and above the national 10-year average.
2026 is shaping as much as be a tenant-friendly yr
Laberge said the agency expects 2026 to be one other renter-friendly yr in most Canadian markets. With additional supply expected from other ongoing projects, this may give incomes time to maintain up with previous years’ rental growth, he said. “When sales rents start to decline, the market is more volatile,” he said.
“Right now, the dynamic has given customers more freedom to choose where they live,” Pedri said. A more cost-effective environment means they’ll prioritize aspects like location or amenities when moving, somewhat than having to calm down. Pedri said many also select rent-controlled apartments while prices are lower.
