Renters in Canada are catching a bit of a break as rents continue to fall across most major cities, a new report by the Royal Bank of Canada shows.
Rents declined for the first three months of the year in more than half of Canada’s 40 major cities compared with the same period a year ago, analysis from RBC economist Rachel Battaglia found.
Vancouver leads with the steepest decline in rent for two-bedroom units, with a drop of $270 a month. This was followed by Kelowna, B.C., which saw a $230 drop, Calgary with a $170 drop, Toronto with a $160 drop and Halifax with a decline of $150.
The cooling of the market, however, predates U.S. President Donald Trump’s trade war.
The report said that “affordability constraints, decelerating population growth, and increased rental supply have collectively helped rebalance rental market dynamics in recent quarters.”
The report found that rental markets in Ontario and B.C. have been disproportionately impacted by the federal government’s cuts to immigration levels.
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“That’s helped ease housing demand while rental supply continues to build, fostering softer rental market conditions compared to other regions,” the report said.
Markets with a high concentration of students have seen sharp drops in rents. Kitchener-Cambridge-Waterloo and Guelph in Ontario, for example, have seen monthly rents fall by $130 and $50, respectively, which has coincided with the broader decline in international students due to federal restrictions.
While the market was cooling before the Trump tariffs hit Canada, the report said trade war pressure is intensifying the trend.
“We’re now seeing clearer signs of labour market weakness in trade-exposed industries, which may be contributing to the sustained downward pressure on rents,” the report said.
Ontario’s manufacturing hubs saw rents fall, with Hamilton seeing a $40 drop, Peterborough seeing rents decline by $30 and Oshawa by $20. In Windsor, which shares a border with Detroit, rents have flatlined.
However, despite the recent drops, rents remain elevated in many major cities compared with pre-pandemic levels. The report expects rents across Canada to continue to moderate.
“Several factors point to lower rents going forward. Persistent labour market weakness will likely suppress wage gains, while stricter immigration targets continue to slow population growth and limit new household formations,” it said.
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