“Interest rates are also expected to fall in 2025, making it easier for renters to transition to home ownership,” Sondhi said within the report. “In addition, falling interest rates should reduce costs for landlords and reduce the pressure to pass these costs on to rent.”
The rental supply is growing and offers tenants more options
Forecasts assume that the rental market may also appear more attractive in 2025 as recent offerings are developed.
According to Canada Mortgage and Housing Corp. Last yr saw Canada’s largest supply of purpose-built rental housing in greater than three a long time, Canada Mortgage and Housing Corp. said. in a recent report, and Sondhi added that “another flood” is predicted to be accomplished this yr.
The Federal Housing Authority said the common rent for a two-bedroom functional apartment rose 5.4% to $1,447 in 2024, in comparison with an 8% increase in 2023. (CMHC’s report examines the prices the actual rental payments and never the listing of the requested prices, which are sometimes higher.)
Meanwhile, Canada’s supply of purpose-built rental housing grew 4.1% year-on-year.
“It’s definitely a little breath of fresh air. However, rental markets across Canada are still very, very tight,” CMHC deputy chief economist Tania Bourassa-Ochoa said in an interview. She noted that the emptiness rate is higher for newer, dearer units, while the emptiness rate for cheaper properties is “still extremely low.” “When we think about what does this mean for tenants? Ultimately, affordability challenges definitely still exist, and in many cases affordability has actually worsened.”
Ladas said most major cities are still underserved in terms of rental properties, meaning it is going to be difficult to keep up the relief that 2025 brings for renters.
“At least through the first half of 2025, we can expect the most affordable markets to continue to see higher demand and the most expensive markets to continue to see lower demand and rents to continue to decline,” he said. “But I think these falling rental prices should be seen as more of a temporary thing.” He noted that recent high-rise buildings take years to construct and lots of that opened last yr were the results of projects that began at one point , as borrowing costs collapsed throughout the pandemic.
