Canada Multi-Family Market Report Outlook (2025 to 2030)

Apartments - Vancouver Island North Submarket

Executive Summary

• National Rebalancing: Canada’s multi-family housing sector is transitioning from an overheated post-pandemic boom toward a more balanced state. Vacancy rates have risen to ~3.9% nationally – the highest in several years – as new supply outpaces demand in 2024/25. Annual rent growth has effectively stalled (national asking rents are down ~0.7% year-over-year) after record increases in 2022–2023. This cooling reflects both softening demand – due to slower population growth and economic headwinds – and an unprecedented wave of new apartment deliveries.

• Diverging Market Dynamics: Rental conditions vary widely by region and asset class. Previously ultra-tight markets like Toronto and Vancouver are seeing vacancy ease toward more normal levels (~2–3%) after hovering near 1% a few years ago. In contrast, Alberta’s major cities have experienced sharp vacancy jumps (Calgary spiked from 1.4% in 2023 to roughly 4.8% in 2024) as record inflows of new rentals met a moderating influx of migrants. Higher-end new developments are underperforming: luxury units in Toronto and Vancouver face vacancies approaching 10%, forcing landlords to temper rents. Meanwhile, older, affordably priced rentals remain near full occupancy, though rent-controlled units can only raise rents ~2% annually on turnover. Markets like Montreal, Ottawa, and Edmonton are notable outliers, still registering rent growth and tight occupancy amid sustained local demand.

• Supply Surge and Pipeline: Years of underbuilding have given way to a multi-decade high in construction. Nearly 100,000 purpose-built rental units are now underway across Canada, alongside a condo boom that adds “shadow rental” supply (as much as 50% of new condos end up rented out). 2024/25 deliveries hit record levels (~25k new units nationally in the past 12 months), finally providing some relief to renters. However, developers are growing cautious. With higher vacancies and costs, new project starts may slow by 2026–2027. This could set the stage for another supply crunch later in the decade if population growth rebounds. Government policy is responding – for example, the federal GST on new rental construction was removed in late 2023 to improve project viability (a welcome but not sufficient step).

• Demand & Affordability Pressures: Population growth, while still positive, has downshifted dramatically. After hitting a 66-year high of 3.2% in 2023 (driven largely by temporary immigrants), Canada’s expansion is now slowing. In response to housing and infrastructure strains, the government slashed 2025 immigration targets by 20% – from 500,000 to 395,000 – and is curbing international student entries. Net non-permanent resident counts are actually falling in 2024/25. This policy shift, combined with a cooling economy (and higher youth unemployment), has tempered rental demand formation in the short run. That said, underlying need remains extremely robust. Renting is still the only affordable option for many Canadians, given record-high home prices and mortgage rates. Indeed, for the first time ever, more households rent than own in Toronto and Vancouver – a testament to the affordability gap. The chart below illustrates how homeownership costs have far outpaced incomes and rents since 2006, worsening the buy vs. rent tradeoff

• Investment Market Resilience: Investors remain fundamentally bullish on multi-family’s long-term prospects, but higher interest rates and economic uncertainty have cooled deal activity from 2021–2022 peaks. 2024 saw a rebound in apartment investment volumes (e.g. Montréal’s multi-family sales jumped 46% vs 2023) as borrowing costs began to stabilize. However, Q1 2025 activity dipped again amid recession fears and volatile U.S. trade policy. Cap rates have expanded from their historic lows – average apartment cap rates rose into the mid-4% range in 2023–24 (e.g. ~4.2% in Toronto by Q3 2024, up from ~4.0% a year prior) – but appear to have leveled off. Pricing has undergone a healthy correction: the average price per unit is down to about $300k, off roughly 30% from the frothy 2021–2022 highs ( ~$422k per unit). Notably, values have held better than transaction volumes, reflecting owners’ reluctance to sell at discounts. Financing strategies have adjusted – assumable low-rate debt and seller take-back mortgages became common to bridge the interest rate gap. With the Bank of Canada now in an easing cycle, debt costs should gradually improve, potentially bringing some investors off the sidelines. Indeed, late 2024 even saw slight cap rate compression in anticipation of rate cuts. Multi-family remains a favored asset class for its stable cash flows and defensive qualities; private buyers in particular are active on smaller deals (<$20M) where financing is more accessible. Larger institutional trades are less frequent, but strong capital appetite persists for modern stabilized assets (some experts foresee cap rates for newer product compressing again as quality supply is limited).

• Outlook Through 2029: The medium-term forecast calls for a continued balancing of Canada’s rental market before the next upswing. Vacancy rates are expected to peak in 2025–26 (in the low-4% range nationally) as the current construction wave completes and demand remains subdued. By 2027–2028, vacancy should plateau or even ease downward, assuming population growth regains momentum and new construction tapers off. Rent growth will likely stay muted in 2025 – essentially flat to inflation at best – given the one-two punch of more supply and softer demand. Beyond 2025, rents are projected to rise modestly (on the order of 2–4% annually through 2029) in most scenarios, reaccelerating only if economic and migration trends outperform. Affordability concerns will remain front and center. Even with slower rent increases, renting will remain far more attainable than ownership for the average household. Policymakers at all levels are under pressure to expand housing availability; we anticipate continued pro-supply measures (zoning changes, fast-tracking permits, incentives for rentals) to help close the housing gap. By 2029, Canada’s multi-family sector should benefit from both higher structural demand (due to an aging millennial cohort and persistent immigration) and lessons learned from this cycle – namely, the importance of aligning immigration levels with housing supply. Investors and lenders can expect steadier conditions after 2025: gradually firming rents, moderate vacancy, and a more predictable interest rate environment – all underpinning the multi-family sector’s reputation as a stable, income-generating asset class.

Economic & Demographic Backdrop

Slower Growth After a Population Boom: Canada’s recent housing dynamics are best understood in the context of wild swings in population growth. The country added a record 1.27 million people in 2023 (+3.2%), its fastest growth since 1957. This surge – driven 97% by international migration – exacerbated housing shortages and fueled unprecedented rental demand. By mid-2024, however, the federal government responded to mounting affordability and infrastructure strains by dramatically tightening immigration policy. Official permanent resident intake targets for 2025 were cut from 500,000 to 395,000 (-20%), with further reductions slated for 2026 and 2027. Moreover, roughly 1.3 million temporary residents (international students and foreign workers) are expected to exit Canada or transition to PR status over 2024–2025, ending the rapid net inflows of non-permanent migrants that marked the prior years. Early data confirm this pivot – net migration is already declining, and 2024 was the first year since 2021 to see an outright drop in non-permanent resident counts. The upshot is that household formation is slowing notably in 2025. Fewer new Canadians (especially the student cohort that overwhelmingly rents) means less incremental rental demand on the margin.

Uneven Regional Population Trends: National figures mask divergent regional patterns. Alberta leads the country in population growth (3.5% in the latest year), buoyed by interprovincial inflows from Ontario and B.C. as Canadians relocate in search of affordable housing and jobs. This helped drive record rental demand in Calgary and Edmonton through 2023. Other provinces, however, have slipped below 2% growth. Notably, expensive markets like Ontario and British Columbia are seeing more out-migration to cheaper regions (the Prairies, Atlantic Canada) even as their international immigration slows. This internal population shuffle is shifting some rental demand toward smaller markets. For example, Atlantic cities saw an influx of newcomers in recent years, tightening their rental markets, though that too may ease as immigration overall cools.

Macro Economy – Headwinds & Rate Cuts: Canada’s economic momentum has downshifted in 2025, weighed down by high interest rates and external risks. After aggressive rate hikes in 2022 to tame inflation, the Bank of Canada reversed course in late 2024, cutting rates seven times (225 bps total) by mid-2025. Policy rate cuts – from ~5% at peak down to ~2.5% currently – aimed to counteract a looming mild recession. A major concern has been the fallout from international trade frictions. Tariff disputes (particularly potential U.S. tariffs on Canadian exports) have created uncertainty that’s dampening business confidence, exports, and investment. This drag, combined with the housing market correction, led forecasters to anticipate near-zero or slight negative GDP growth in 2025. The job market is also softening: unemployment has ticked up, especially for younger workers, some of whom are delaying moving out or doubling up roommates as a result. The Bank of Canada remains cautious – while inflation (excluding shelter) is back within the 1–3% target band, the central bank has flagged trade instability as a key risk and is calibrating rate cuts carefully to avoid reigniting price pressures. Most economists expect a modest economic recovery in 2026, assuming trade tensions abate and interest-rate relief filters through. For the rental market, the macro backdrop in 2025 implies slower demand growth (due to weaker employment and migration) but also a potential boost to supply-side dynamics as financing costs for developers begin to ease. Lower interest rates going forward should gradually improve project feasibility and investor purchasing power, albeit with a lag.

Affordability Remains Acute: Despite a cooling economy, housing costs remain near historic highs relative to incomes. By late 2024, the gap between the cost of owning a home and average household income was wider than ever, pricing out a huge share of would-be buyers. This has direct implications for rentals: many families that might have purchased a starter home a decade ago are now staying in the rental market longer. Renting continues to be the more affordable housing option for most, even though rents themselves hit record levels in 2022–23. Rental affordability is strained (with rent-to-income ratios elevated in cities like Toronto), but ownership affordability is worse – a typical mortgage on an average home can easily cost double the monthly rent of an equivalent unit. The affordability crunch is illustrated by the trend that Toronto and Vancouver now have more renter households than homeowners for the first time on record. In short, Canada’s affordability woes, coupled with high immigration in previous years, have structurally increased the pool of renter households. This underpins long-term rental demand even as near-term cyclical factors cause ups and downs.

Demand Dynamics and Rental Market Trends

Cooling Demand Growth in 2024/25: The combined effects of policy and economic shifts have begun to temper rental demand. Most notably, the federal immigration pullback has reduced the flow of new renters, particularly in segments like student housing. Colleges and universities had been inundated with international students up to 2023, but with new enrollment restrictions and visa hurdles, demand for student rental housing has weakened in 2024 according to anecdotal reports. High-end urban rentals that catered to affluent foreign students are feeling this immediately – some landlords who once counted on a fresh cohort of international renters each fall are now facing unexpected vacancies. Beyond immigration, economic stress is curbing household formation. The unemployment rate among younger adults (15–25 years old), a key renter demographic, has climbed to its highest level in years. Consequently, more young adults are delaying moving out or are moving back in with family, while others are doubling up with roommates to save on rent. This trend is slowing net absorption of apartments, even as total population still grows. In the 12 months ending mid-2025, only about 11,300 rental units were absorbed nationally, less than half the number of new units delivered in that period. This imbalance marks a stark change from 2022, when absorption was running at record highs (national net absorption peaked at ~26,700 units in Q3 2022). Now, demand has become highly selective: the most affordable units and locations continue to lease up quickly, whereas higher-cost units see more lukewarm interest.

Affordability Safety Valve: Paradoxically, the very lack of housing affordability is also propping up rental demand in a different way. With home ownership out of reach for many, the rental market has become the default refuge. Mortgage costs roughly doubled from 2021 to 2023 due to interest rate hikes, and although home prices have cooled slightly, ownership remains prohibitively expensive in most metros. Renting, while costly, is still far cheaper than buying in terms of monthly cash flow. This has led to situations where some higher-income households that might have exited to homeownership are continuing to rent, thereby supporting demand for upscale rentals (to a point). It also means that landlords retain pricing power for well-located, mid-market rentals, since many tenants have few alternatives. As evidence of this dynamic, both Toronto and Vancouver have seen a profound shift in tenure: renting is now more common than owning, reflecting how even middle-class families are remaining in rentals longer-term. Additionally, the pent-up demand from the last few years hasn’t fully dissipated – Canada’s population grew so rapidly in 2022–23 (adding nearly 2 million people in 24 months) that housing supply couldn’t keep up, leaving a backlog of unmet rental needs. Even with slower growth now, that cumulative demand doesn’t vanish overnight. Many would-be renters have been waiting for an opening – for example, living in overcrowded conditions or suboptimal housing – and are ready to move into available rentals as soon as they can afford to. This helps explain why, despite the current softer conditions, vacancy rates for lower-cost rentals remain extremely low (often under 2%) and any units that become available are quickly taken.

Shift in Renter Preferences: The post-pandemic period also brought some shifts in what renters are looking for, which in turn affects demand distribution. During the pandemic, some renters moved to smaller cities or suburban areas in search of space and affordability. As of 2024–25, urban core demand has recovered (downtown vacancy rates in cities like Toronto and Vancouver are back down to pre-pandemic norms, aside from the newest buildings). However, renters are now more price-sensitive and value-conscious. Many are trading down to cheaper units or neighborhoods if faced with a steep rent increase on their current unit. This price sensitivity is one reason that older rental stock with lower rents is staying fully occupied, while brand-new luxury projects with premium pricing are leasing up slower. Renters are also factoring in utility costs and commute expenses more than before, given inflationary pressures. Some secondary markets that boomed (e.g. small Ontario cities or Alberta’s mid-sized cities) may see slower demand now that big-city rents have stabilized somewhat and return-to-office work brings some tenants back. Overall, demand growth is not uniform – it’s bifurcated by affordability and economic opportunity. Regions with strong job prospects and reasonably priced housing (e.g. parts of Alberta, Quebec) continue to draw renters, while extremely expensive markets (Toronto/Vancouver) rely more on core urban lifestyle demand and immigrants (both of which are currently subdued).

Immigration Policy Impact: The new immigration stance deserves special attention for its demand implications. The federal government’s decision to rein in immigration is largely a response to housing shortages – an explicit acknowledgement that rampant population growth was unsustainable without commensurate housing. In the short term, the ~20% reduction in permanent residents for 2025 (and possibly beyond) directly translates to tens of thousands fewer new renter households than previously expected. Additionally, the focus on reducing international students and other temporary residents hits a very specific segment of rental demand. Many of those students tend to rent in campus-adjacent areas or downtowns of major cities. Early reports in 2024 indicate that in some university markets, landlords have had to offer incentives or accept lower rents to fill student-oriented units that in past years would see bidding wars at lease-up. Some high-end projects that targeted foreign students (with features like furnished micro-units or luxury amenities) are struggling to find enough domestic tenants willing to pay a premium. However, the longer-term effect of the immigration policy is uncertain – it could be temporary. Canada’s government may adjust targets again later if economic conditions change. For now, though, policymakers have signaled a period of population growth moderation, giving the housing sector a chance to catch its breath.

Household Income and Rent Budget: On the demand side, it’s also important to note stagnant income growth as a limiting factor. Canada has experienced relatively weak household income growth over the past decade. Inflation surged in 2021–2022, but wage gains lagged, eroding real incomes. As of 2025, real disposable incomes are just starting to stabilize. This means many renters simply cannot afford continual large rent hikes, which itself is dampening how fast rents can rise (a demand-side “governor” on rent growth). Landlords in expensive cities report that tenants have become more resistant to rent increases and more inclined to negotiate or move to cheaper housing if faced with big jumps. With essential costs (food, energy) also higher, renters’ budget constraints are tighter than before. This is one reason why we are seeing rent growth flatten – not only is new supply creating alternatives, but also tenants’ ability to pay more has reached a ceiling in many cases. For investors and owners, this underscores the importance of rental affordability: markets can only push rents so high relative to local incomes before demand responds by pulling back, even if there’s a theoretical housing shortage.

Supply and Construction Pipeline

From Chronic Undersupply to Building Boom: Canada’s multi-family supply story has flipped from famine to feast – at least in terms of units under construction. For decades, purpose-built rental development was anemic, especially in the 1990s and 2000s. Strict rent control policies and higher returns in the condo sector diverted developers away from rentals. Instead, the country relied on the “shadow rental market” (individual condo investors renting out units) to meet rental demand. This left Canada with a structural shortage of professionally managed rental apartments. By the late 2010s, vacancy rates in major cities had fallen below 2%, clearly signaling a need for supply. The response finally gained momentum in recent years: rental apartment construction has surged significantly since 2019, reaching levels not seen in generations. According to Canada Mortgage and Housing Corporation (CMHC), nearly 100,000 purpose-built rental units are currently under construction nationwide – a multi-decade high. For context, this is roughly double the pipeline from just five years ago. Several factors enabled this boom: low interest rates pre-2022, new financing programs (like CMHC’s rental construction loans), and the extreme market tightness giving confidence that projects would lease up. Developers pivoted to rentals as condo markets became saturated and as government incentives (and moral suasion) encouraged building more housing for rent.

Geographic Concentration of Supply: This new supply is not evenly spread. It is heavily concentrated in Canada’s largest metropolitan areas, which makes sense given those were the most undersupplied. Toronto and Vancouver have led the charge – historically low vacancies and record immigration in those cities prompted many developers to launch rental towers despite high land and construction costs. Alberta’s cities (Calgary and Edmonton) also ramped up rental construction significantly. In fact, on a per-capita basis, Alberta has seen one of the strongest increases in new rental supply among provinces. This is partly due to more development-friendly policies (Alberta has no rent control and generally faster permitting), and partly due to a surge of in-migration creating confidence in future rental demand. Quebec (especially Montreal) has also seen a notable uptick in rental starts, supported by provincial programs and strong demand from students and young workers. According to CMHC forecasts, Montreal’s rental housing starts will continue to rise in 2025, making rentals the most built housing type in that region. On the other hand, some mid-sized markets and rural areas have seen relatively little new rental construction – it remains challenging to justify new builds where rents are low. Thus, the supply boom is primarily an urban phenomenon focused on core cities and their suburbs.

Condo Shadow Market – Still a Factor: Even as purpose-built rentals make a comeback, condominiums remain a key source of rental supply. Over the past two decades, condo development vastly outpaced rental in cities like Toronto and Vancouver. It’s estimated that about half of new condos in those markets were purchased by investors (not owner-occupiers), effectively adding to the rental stock when those units are leased out. As of spring 2025, around 150,000 condo units are under construction in Ontario and British Columbia alone. Many of these condos were pre-sold during the frenzied market of a few years ago. However, with condo resale prices now off their peak, some investor-buyers can no longer count on flipping at a profit. When these units complete, if they can’t be sold easily, they often end up on the rental market as the investor tries to generate cash flow. In effect, every unsold condo is a potential rental unit. This dynamic is important because it bolsters near-term rental supply beyond just the purpose-built projects. For instance, Toronto’s condo rental listings have increased as thousands of new condos hit the market in 2024–25. The shadow rental supply from condos is helping alleviate some rental pressure, especially in the high-end segment (since many investor-held condos are upscale units in prime locations). But it also introduces volatility – if the resale market were to rebound strongly, some of these units could convert back to owner-occupancy or be sold to end-users, reducing rental stock. For now, though, the rental market is benefiting from a one-two punch of more purpose-built units and more condo rentals coming available.

Record Completions and Short-Term Glut: The construction wave is now translating into actual deliveries. Over the past 12 months, ~24,987 new rental units were completed nationally – one of the highest annual totals on record. Completions in early 2025 alone hit a quarterly peak (just over 27,000 units delivered in Q1 2025 – an all-time high for a single quarter). This sudden influx of supply is a major reason vacancies have climbed. It’s a classic case of supply finally catching up just as demand growth cools. Lease-up challenges have emerged, particularly for large multi-phase developments finishing around the same time. For example, several new luxury high-rises in Toronto are reported to be struggling to reach full occupancy, with some projects quoting ~10% vacancy even a year after opening. In Vancouver as well, a surge of new high-end rental and condo projects in 2024 led to modest rent declines in top-tier units as landlords competed for a limited pool of affluent renters. This doesn’t mean the units won’t fill – many are leasing, just more slowly, and often after some concession (such as a free month’s rent) or slight rent discount. Importantly, the more affordable new projects (including many in Alberta or smaller cities) are not facing the same difficulty – those are leasing up well, as local demand remains sufficient and rents are in line with market needs. It’s the projects that underwrote very aggressive (high) rents that are now having to adjust expectations.

Development Outlook – Hitting Pause: Given the softer market indicators, there are signs that developers are tapping the brakes on new projects. Rising vacancy and flattening rents, if sustained into 2025, will make it harder to justify new groundbreakings. Construction costs, while off their peak, remain elevated (only about ~8–10% below the 2022 highs, and still ~40% above pre-pandemic levels in many markets). Land prices haven’t fallen much either, especially in cities. As CBRE notes, concerns about potentially lower rental demand (due to the immigration cuts) are likely to cause many developers to hold off on launching new apartment projects until there’s more certainty in the outlook. We expect 2025 rental starts to be flat or slightly down from 2024 levels, and 2026 starts could decline more significantly if the market hasn’t tightened back by then. Indeed, industry projections suggest that by 2026, new rental deliveries in Canada could drop by over 50% from the 2024–25 peak as developers pause – a similar pattern as expected in the U.S. multi-family cycle. This pullback, however, sets the stage for a possible shortfall a few years out. If population growth accelerates later in the decade (as underlying needs would suggest, given Canada’s immigration-based growth model), a construction slowdown now could mean another crunch around 2028–2030. Policymakers are keenly aware of this risk. That’s one reason the federal government introduced the GST rebate for new rentals in late 2023 – to shave roughly 5% off development costs and keep builders building. Provinces like Ontario and B.C. followed by waiving provincial sales tax on new rental construction. While these moves improve project economics on paper, market fundamentals ultimately drive decisions. If rents are soft and vacancy up, even a tax break may not entice a developer to proceed immediately. The likely scenario is a modest slowdown in starts for a year or two until the current supply is absorbed.

Policy Measures to Boost Supply: Besides tax incentives, there are other policy shifts aimed at sustaining housing supply. The federal government’s National Housing Strategy has programs offering low-cost loans and financing via CMHC for rental projects that meet affordability criteria. Some cities have also relaxed zoning (e.g., allowing more mid-rise apartments as of right, encouraging “missing middle” developments) and sped up approvals for housing proposals. For example, Toronto’s 2023 housing action plan aimed to reduce red tape for development applications. Vancouver has implemented rental zoning in certain areas to ensure land gets used for rental housing. These measures, over time, should help keep a baseline level of construction going. That said, the most powerful driver is still market signals – and right now the market is signaling caution. We expect the construction pipeline to remain sizable through 2025 (as projects already in progress complete), but new project initiations will likely slow until vacancy and rent trends improve. By 2027–2028, assuming demand picks up, we could see another wave of development – especially if interest rates are substantially lower by then and if governments further incent affordable housing construction (for instance, through expanded grants or faster approvals).

In summary, Canada’s rental supply has finally caught a long-awaited growth spurt. The near-term challenge is digesting this supply without destabilizing the market. So far, the evidence of modest oversupply is mostly confined to the luxury segment in a few big cities. Otherwise, most markets still have low or moderate vacancy. Policymakers and developers face a balancing act: build enough to improve affordability, but not so much (all at once) that the market flips into a severe glut. As of 2025, we appear to be somewhere in between – a healthier supply situation than a few years ago, but not an outright glut in the majority of the country.

Vacancy and Rent Evolution

Vacancy Rates Climb Off Historic Lows: Nationally, the vacancy rate has risen to ~3.9% (as of mid-2025), up from about 2% in 2022 and roughly 3% in 2021. This marks a return to a vacancy level Canada hasn’t seen in over five years – effectively a normalization after an exceptionally tight period. To put it in perspective, 3.9% is still relatively low by international standards (the U.S. national apartment vacancy is around 6%; many large American cities run 5–7% vacant). In fact, Canada’s major metros remain among the tightest rental markets in North America – recent data show 2024 vacancy rates of 2.5% in Toronto, 1.6% in Vancouver, and 2.1% in Montreal, which were the lowest among major cities on the continent. Only a handful of U.S. metros (like New York City at ~3.1%) come close. That said, the trend is what matters: vacancies are rising from their rock-bottom troughs.

Urban Markets: Slight Loosening in Toronto & Vancouver: In Toronto, purpose-built rental vacancy fell below 1% in 2019 and remained extremely low through 2022 (aside from a brief pandemic spike in 2020). Now, Toronto’s vacancy is estimated around 2.5%, a notable increase that brings it closer to a balanced market. Vancouver similarly saw vacancy under 1% for years; it’s now roughly 1.6% and expected to edge up further with new supply. These increases reflect both supply additions and a slight tempering of demand. For landlords and renters, a 2–3% vacancy means some choice and breathing room returning – units are no longer immediately snapped up with dozens of applications in all cases. We’re seeing a bit more negotiation power shifting to renters in these cities’ high-end segment; for example, some landlords of newer Vancouver apartments have had to offer small discounts or incentives, which was unheard of a couple years ago. However, in the affordable segments of these cities, vacancies remain ultra-low. The increase in overall vacancy is mostly coming from the newest deliveries. Older buildings in Toronto/Vancouver with below-market rents are still effectively full (vacancy <1%) because tenants are holding onto those units for dear life (thanks in part to rent control limiting increases for sitting tenants).

Prairie Markets: Volatility in Alberta: The most dramatic vacancy swings have been in Alberta. Calgary’s vacancy plunged to ~1.4% in 2023, its lowest on record, due to an influx of migrants and limited rental stock. That tightness unleashed a development boom – Calgary’s rental inventory jumped ~10% in one year – and by late 2024 the vacancy rate soared to about 4.8%. This jump from essentially full occupancy to a looser market in the span of 12–18 months is striking. Edmonton saw a similar whipsaw: its vacancy was above 4% in 2022, dropped to ~2.4% by 2023 amid a surge of demand, and likely climbed back up in 2024 as new supply hit (Edmonton had thousands of new units complete) Even with 4–5% vacancy, these Alberta markets are hardly in crisis – they are returning to a more typical level for them historically (Edmonton often had 5–7% vacancy in the mid-2010s when oil prices slumped). Importantly, demand remains strong in Alberta – the higher vacancy is mostly due to rapid expansion of supply, not an exodus of renters. As long as the province’s economy and inflows stay solid, we expect these vacancies to stabilize and gradually tighten again as the new units get absorbed. In fact, CMHC forecasts that even with vacancy rising in 2024 and 2025, Prairie rental markets will remain relatively tight by historical standards and should support continued rent growth (albeit slower). Saskatchewan’s cities (Regina, Saskatoon) and Winnipeg also saw slight upticks in vacancy recently but are generally in the 3–4% range, which is moderate.

Montreal and Ottawa: Still Tight Markets: Montreal’s vacancy rate was about 2.1% in 2024, up from an incredibly low 1.5% in 2023. With lots of rental construction underway, Montreal is forecast to see vacancy rise to the mid-2% range by 2025 (around 2.5%) and toward ~3% by 2027. Even so, Montreal is expected to remain comparatively tight – CMHC notes the market “will ease slightly” but “remain tight as supply remains insufficient and demand stays strong”. Similarly, Ottawa’s vacancy was ~2.6% in 2024, and projected to rise modestly to ~3.1% by 2026. Ottawa benefits from steady government-driven housing demand and had less of a building boom than other big cities, so its market hasn’t loosened as much. Overall, Canada’s secondary metros like Ottawa, Halifax, Quebec City, Winnipeg are mostly in the 2–3% vacancy range – still landlord-favorable, though not as extreme as the sub-1% conditions of a couple years back.

Rent Growth Peaks and Falls: Rent trends have mirrored the vacancy changes. After soaring to record highs in 2022 (national average asking rents up ~9–10% year-over-year at peak), rent growth decelerated through 2023 and turned flat/negative in 2024–25. As of mid-2025, national asking rent growth is about -0.7% year-on-year, meaning rents are slightly lower than a year ago on average. This is a remarkable shift from the >5% annual gains Canada’s rental market had become accustomed to in the late 2010s and the post-pandemic surge. According to CBRE data, 2024’s rent growth was highly bifurcated: newer, high-end units actually saw rents decline, while more affordable units saw modest increases. In the major metros: Toronto and Vancouver are seeing outright rent declines in the luxury segment (downtown Class A rents off perhaps 5–10% from peak in some cases), whereas suburban and older building rents are flat or still inching up. CBRE’s year-to-date 2024 figures showed that cities like Toronto and Vancouver had some of the steepest rent drops (indeed, some submarkets were down ~5–10% YTD), while Prairie cities like Saskatoon and Calgary still showed rent gains for the year. A Montreal broker noted that unlike Toronto/Vancouver, Montreal hasn’t seen rent deflation – rents are still rising, if slowly. This aligns with observations that Edmonton and Ottawa are among the few markets with rent growth in early 2025. In Edmonton’s case, high in-migration and a previously undersupplied market led to a rent surge in 2022–23, and rents there remain above year-ago levels (Edmonton’s average 2-bedroom rent in CMHC’s survey rose ~7% in 2023, and is forecast to keep growing albeit at a slowing pace).

Rent Control and In-Place vs. New Leases: One nuance in rent trends is the difference between in-place rent growth and market rent growth. Many Canadian provinces (Ontario, BC, etc.) have rent control limiting annual increases for existing tenants (to around 2–2.5% in recent years). This means landlords often can only significantly raise rents when a unit turns over (vacates and re-leases). Over 2021–2022, fast turnover and desperate tenants meant market rents skyrocketed (double-digit gains), far outpacing the more modest increases existing tenants paid. Now, however, tenants are staying put longer (why move if your rent is controlled and any new unit would cost much more?). This has resulted in much lower turnover. Landlords of older buildings find themselves stuck at 2% annual increases for many units, even as market rents around them had jumped. Now that market rents have plateaued, those tenants are sitting in units often significantly under market rate, with no incentive to leave. The overall effect is that average “in-place” rent growth has slowed (because so many tenants are paying just the guideline increase). Meanwhile, market rents on new leases actually fell in some areas, closing a bit of the gap. This dynamic partly explains why the official rent growth statistic (-0.7% YoY) looks low – it blends together units with different situations. In provinces without strict rent control (e.g. Alberta), rents are more flexible but even there, market forces are capping increases now due to the new supply.

Affordability Constraints Slowing Rent Increases: We touched on this earlier, but it bears repeating: landlords are bumping up against affordability limits. Through 2022, many renters stretched beyond normal limits or used savings/stimulus money to pay soaring rents. That era is over. Now renters are bargaining more. In some cases, renters are moving from premium units to more basic ones to save money, which forces the premium segment to adjust pricing. Rent-to-income ratios in Toronto and Vancouver reached ~50% for many young renters at the peak – clearly unsustainable. As the labor market loosens, landlords can’t count on renters getting big pay raises to cover rent hikes either. This is why even in markets with low vacancy, the pace of rent growth is slowing. For example, Halifax had extremely low vacancy in 2021–22 and huge rent gains, but by 2024, vacancy ticked up slightly and rent growth eased, in part because tenants simply couldn’t keep absorbing 10%+ hikes annually. A CMHC analysis found the historical relationship between vacancy and rent growth held – as vacancy rose, rent growth slowed in proportion. The Prairie markets are an interesting case: historically, a 5% vacancy might correlate with flat rents or slight declines, yet in 2023 Calgary and Edmonton both had rent growth far above what their vacancy alone would suggest (thanks to strong demand and high incomes). As their vacancies moved up in 2024, that pressure on rents has lessened. We expect rent growth to remain “flat to inflationary” for the next year in most markets – meaning roughly 0–3% range, which given current inflation (around 2-3%) is basically at inflation or a bit below. Only in pockets where vacancy stays extremely tight (e.g. some smaller markets or particularly affordable segments) will rents rise significantly faster.

New Builds vs. Older Stock – Rent Divergence: A clear trend is the underperformance of rents in brand-new buildings relative to older stock. As mentioned, many new projects are coming in with very high asking rents (to cover their higher construction costs and proforma expectations). However, with a limited pool of tenants who can afford those, some new buildings are pricing themselves above what the market can bear. CoStar noted that “new purpose-built rentals not subject to rent controls are facing the greatest downward pressure on rents”, as their pro forma rents overshot the market. In Toronto, buildings completed since 2020 reportedly have vacancy near 10% on average, versus ~1–2% in older buildings. Landlords of these new buildings have begun cutting rents or offering concessions to fill units. This means the effective rent in new luxury buildings has been falling, a trend likely to continue through 2025 as even more high-end supply arrives. On the flip side, older buildings (especially those built before 2018 that are subject to rent control in Ontario, for example) have very low turnover and consistently high occupancy. Their landlords can only raise rent modestly on existing tenants, but when a rare vacancy occurs, they often can re-lease at a significantly higher market rent (if the unit is still below market). This dynamic keeps older, well-located buildings extremely tight – tenants do not give up a rent-controlled unit easily. So we have a somewhat paradoxical situation: new buildings are the ones with “lease-up” vacancy issues, while the oldest buildings remain essentially full. Over time, some of those new units will eventually fill (as rents adjust down or simply as the renter pool catches up). The key question is whether the market overall will experience a sustained rent dip due to the influx of these new units. So far, the evidence suggests a soft landing scenario – moderate vacancy increases and slight rent declines at the top end, rather than a severe oversupply-driven crash in rents.

Vacancy Outlook: Looking ahead, we expect vacancy rates to continue a gradual rise into 2025, potentially reaching the low-4% range nationally (from ~3.9% now up a few more basis points). Some metros like Calgary could see mid-single-digit vacancy (5–6%) before leveling off, given the volume of deliveries there. Toronto and Vancouver might head toward ~3% vacancy, which would be the highest for them in over a decade, yet still relatively tight. By 2026–27, if construction slows as projected, vacancy may peak and then start inching down again. CMHC’s forecast for many markets is a slight increase in vacancy in the coming years, but remaining below historical highs. In other words, we’re not going back to the loose rental markets of the 1990s, barring an economic shock. The population baseline (even with lower immigration) plus fewer people buying homes should keep rental demand underlying strong enough to prevent a glut. So the “new normal” vacancy might be something like 3–4% nationally instead of 2–3%. That is a healthier equilibrium, providing renters a bit more choice while still allowing landlords to earn stable income.

Rent Growth Outlook: Correspondingly, rent growth is expected to remain subdued in the near term. 2025 will likely see flat to slightly positive rent growth nationally (0–2%), with the possibility of some index measures showing a small decline if high-end weakness persists. In markets like Toronto/Vancouver, we could see another year of very minimal average rent change – some segments up a touch, others down. In more affordable or undersupplied markets (parts of the Prairies, maybe Montreal), rents should continue to rise modestly. By 2026–27, assuming vacancy stabilizes and the economy improves, rent growth could pick up to more normal levels (e.g. 3–4% annually). But any return to the heady days of 8-10% annual rent spikes seems unlikely in the medium term, absent a policy shock (like if immigration suddenly booms beyond forecasts again). Policymakers would likely intervene (with more supply or tenant support) if rents started soaring that fast again, given the political focus on affordability. In fact, renter affordability is expected to improve gradually over the forecast horizon thanks to these higher vacancies and slower rent increases. It may be late in the decade before renters truly feel relief, but the worst of the rent crunch appears to be over for now.

Investment Market and Capital Flows

2024 – A Rebound Year for Investment: After a sluggish 2022–2023 (when rising interest rates put a chill on real estate transactions), 2024 saw Canadian multifamily investment activity bounce back significantly. Investors were lured by the sector’s strong fundamentals and the prospect of falling financing costs. For example, in Montreal – Canada’s second-largest rental market – multifamily investment volume jumped 46% from 2023 to 2024, and represented 41% of all commercial investment volume in that region. The trend was similar in Toronto and Vancouver, where brokers report transactions picked up in late 2023 and into 2024 as buyers and sellers gradually adjusted price expectations. By Q4 2024, cap rates had stabilized and debt availability (particularly through CMHC-insured loans) improved slightly compared to the volatile mid-2022 period. Additionally, the Bank of Canada’s rate cuts beginning in late 2024 improved investor sentiment – many investors wanted to get in ahead of expected further cap rate compression if borrowing costs fell more in 2025.

Q1 2025 – Momentum Pause: However, early 2025 brought new headwinds. The resurgence of economic uncertainty (largely due to external factors like the U.S. tariff threats and recession fears) made investors more cautious again. Avison Young reported that Q1 2025 multifamily sales volumes dipped from the very strong Q4 2024, as some buyers hit pause to reassess risk. Investor confidence was dented by concerns that trade turmoil could hurt the economy or lead to higher yields. That said, the pullback appears to be a temporary moderation rather than a crash – “we didn’t sustain the high levels in Q1 2025” after the big 2024 gains, as one brokerage noted. There’s still ample capital looking to be placed, but underwriting has become more stringent and both sides are negotiating harder on price.

Foreign Capital Retreat: One notable trend is the decline of foreign investment in Canadian multifamily. During 2021–2022, there were a few headline-grabbing acquisitions by foreign buyers (particularly some large portfolio deals and developer partnerships). But since then, foreign buyer activity has receded. In fact, foreign-involved apartment sales have steadily decreased since their peak in 2021. The combination of Canada’s foreign buyer restrictions (there was a temporary ban on foreign purchases of small residential properties enacted in 2023, though multi-unit properties were largely exempt) and the global rise in interest rates made international investors less aggressive. Domestic institutions and private players have more than filled the void in any case. By 2024–25, the multifamily investor pool is predominantly Canadian: pension funds, asset managers, REITs, and private equity for larger assets, and local private investors for smaller assets. Private Canadian investors have been especially active in the sub-$20M segment, which includes many older apartment buildings in secondary markets. These buyers often have different return targets and financing approaches (e.g. partnering with local credit unions or using private mortgages) than institutions, allowing transactions to continue at the middle-market level even when big institutional deals slow.

Pricing and Cap Rates: Perhaps the biggest question in the investment market has been pricing – how to reconcile higher financing costs with sky-high rents and tight vacancies. Over 2022–2023, the typical outcome was cap rate expansion (prices falling in cap rate terms) to accommodate the new interest rate reality. For example, in the Greater Toronto Area the average high-rise apartment cap rate moved from ~3.75% in 2021 to ~4.25% by late 2023. Similar 50–100 bps expansions were seen in Vancouver and Montreal. By early 2024, as interest rates peaked, cap rates largely stabilized. In some cases, they compressed slightly in late 2024 – CoStar noted cap rates even “stabilized and even compressed somewhat at the end of 2024” due to renewed investor competition. The rationale is that multifamily was still viewed as a safer bet compared to other property types (office, retail) struggling with post-Covid issues, so demand for apartments remained high. Additionally, many owners chose not to sell at discounted prices, resulting in limited supply of assets for sale. This kept prices from falling too far.

By Q1 2025, average cap rates for quality multifamily assets in major markets are generally in the low-to-mid 4% range (e.g. 4.0–4.5% for high-rise in Toronto/Montreal, 3.75–4.25% in Vancouver for top properties, higher for secondary markets or older assets). The price per unit metrics illustrate the change: the average price per apartment unit in Canada peaked around $422,000 in 2022, and has since settled around $300,000 in early 2025. That’s a significant reset, but importantly, the bulk of that decline occurred by mid-2023. Prices in 2024–25 have been relatively stable, just at this new level. In some markets like Montreal (where absolute values were lower to start, often $200k or less per door for older stock), prices per unit have even inched up as rent growth continued and investor demand remained strong. Montreal brokers report rising prices for value-add buildings, driven by rent increases and private capital chasing those deals. Meanwhile, newly built, stabilized rental properties (when they do trade) still command premium pricing – in some cases below 4% cap rates – reflecting their desirability to institutional investors. There’s an emerging view that for modern assets in prime locations, cap rates could compress again if interest rates fall further. One Montreal investment advisor predicted “we’re probably going to see some cap rate compression in [the new-build] sector” given the lack of available institutional-quality product and investors’ focus on that segment.

Financing and Lending Environment: A key factor shaping the investment market is the lending environment. Through 2023, higher interest rates constrained loan proceeds – lenders, including CMHC, required deals to underwrite at higher debt coverage ratios, which often meant buyers had to put in more equity or find creative financing. CoStar noted that buyers became “familiar with much less leverage than they had been for much of the past decade”. To bridge the gap, assumable debt (taking over the seller’s low-rate mortgage) became a hot commodity. Deals that included an assumable loan at, say, 2.5% interest were far more attractive and often achieved higher pricing, because the buyer avoided taking a new loan at 5%. Similarly, vendor take-back (VTB) mortgages – where the seller finances part of the purchase at an agreed interest rate – saw renewed use. Sellers willing to offer a VTB at a below-market rate could effectively get a higher price by making the terms feasible for the buyer. These mechanisms kept transactions flowing even when conventional financing was tight.

As of 2025, with interest rates now coming down, financing conditions are slowly improving. The 5-year Canada bond yield (benchmark for commercial mortgages) has eased, translating to slightly lower mortgage rates than the peak. CMHC-insured loans for multifamily are still popular, as they offer the lowest rates (albeit with some extra insurance fees and paperwork). However, CMHC also implemented some tighter underwriting standards in 2024 – aiming to manage risk, they started requiring more conservative rent growth projections and higher debt coverage, which actually offset some benefit of rate cuts. So the net effect is moderate. Lenders remain choosy on older properties that might require significant capex, whereas newer properties with stable cash flow are easier to finance. Given these nuances, well-capitalized buyers (equity-rich) have a competitive advantage in the current market. We’re seeing that in the prevalence of private buyers in small deals – they often use higher equity and less debt, or even pay cash, and then refinance later.

Investor Sentiment: Overall investor sentiment toward Canadian multifamily is positive in the long-run, cautious in the short-run. The long-term thesis – high immigration (even if slower for a couple years), inadequate housing supply, and the enduring affordability of renting – remains intact and compelling. Multifamily is viewed as a relatively “recession-proof” asset class: even if the economy falters, people still need housing and will prioritize paying rent. This defensive characteristic, plus stable cash flows, is why one Avison Young report called the sector a “safe haven” for investors during economic fluctuations. Indeed, through the uncertainty of 2023–24, multifamily was the top-performing real estate sector in terms of investor demand, far outshining office or retail. Cap rates in multifamily rose the least among property types, and there were no distressed sales of note – owners generally could hold through the storm because rent collections stayed strong and loan defaults were minimal.

In the short-run, however, investors are watching a few key items: lease-up risk in new developments, which could impact near-term NOI growth; the trajectory of interest rates, which affects their cost of capital and yield targets; and policy developments, such as any changes to rent control or additional taxes (e.g., there have been discussions of tightening foreign buyer rules or implementing “flipping” taxes on assignments, etc.). By and large, the consensus is that 2025 will be a year of stabilizing, not of massive growth or decline in values. Investment volumes may remain below the peak until there is a clearer economic outlook and further evidence that rents have bottomed out and will start rising again.

Regional Investment Highlights: It’s also interesting to note some regional differences in investment market activity:

• Montreal has been a standout – as mentioned, huge growth in sales volumes in 2024 and strong Q1 2025 as well. Investors are drawn by Montreal’s relatively affordable price per door and upside potential since rents there are lower than in Vancouver/Toronto but rising. Local experts cite Montreal’s “strong long-term rental growth” prospects and tight occupancy as key draws.

• Toronto/GTA multifamily sales volumes, while improved from 2022, were still below historical averages in early 2024 (50% of the 10-year average in Q1 2024, per Colliers). However, by Q2 2024 and into Q4, they gained ground – Q2 2024 in GTA saw ~$456M in sales (+22% YoY), the best quarter since mid-2022. This indicates the GTA market is thawing, and could accelerate if financing improves.

• Vancouver saw relatively fewer trades; many owners there are long-term holders (often families or private trusts) and aren’t selling unless absolutely compelled. When quality assets do come up in Vancouver, competition is fierce. Cap rates in Vancouver remain the lowest nationwide (some high-rise assets still trading below 4%), reflecting scarcity and the city’s high barriers to entry.

• Secondary Markets (like mid-sized Ontario cities, or Halifax, etc.) have also attracted more interest as investors priced out of core markets seek yield. Cap rates in secondary markets can be 100–200 bps higher, which is appealing in a high-rate environment. For example, some mid-sized Ontario rentals might trade at 5–5.5% caps – those garnered attention in 2024 from private buyers. We expect that trend to continue with more inter-provincial capital flows (Toronto investors buying in London or Halifax, etc.).

Luxury vs. Affordable Segments: The investment community is also differentiating between asset types. There’s a bit of skittishness around luxury rental towers right now, given the aforementioned struggles in rent and occupancy. Avison Young’s research noted a “steeper decline in fundamentals and sentiment” for the luxury segment – higher vacancies and flattening rents made those assets seem riskier. Some investors are consequently avoiding the high-end segment in the short term. Instead, many are pursuing “workforce” housing or value-add opportunities – basically more affordable rentals where there’s always strong demand and the risk of rent default or long vacancy is low. The rationale is that mid-market apartments with moderate rents are more recession-resistant (people always need an affordable place to live). Indeed, investors are favoring properties that offer more affordable rents to reduce risk of tenant delinquencies or vacancies. This could mean buying older buildings and renovating them (but not to a super luxury level) or building new “attainable” housing if costs allow.

Outlook for Investment Market: Going forward, multifamily investment is poised to strengthen as the interest rate environment improves. If the Bank of Canada follows through with modest additional rate cuts (taking the overnight rate to ~2.25% by end of 2025 as some forecast), borrowing costs for apartments could drop into the 3-4% range from the 5%+ seen at the peak – a significant boost to investor returns. This will likely bring some leveraged buyers back and could put downward pressure on cap rates again (meaning prices up). We anticipate cap rates might compress by say 25–50 bps by 2026 for prime assets if the debt market eases. Sales volumes should accordingly pick up. Lenders (including big banks) are also likely to get more aggressive on multifamily as office/retail lending remains out of favor – it’s a safer area for them to grow loan books. One caveat is if the economy were to enter a deeper recession, it could cause a pullback in all investment; but even in that scenario, multifamily would likely hold up best.

In summary, investors, lenders, and policymakers remain very much focused on the multi-family sector as a cornerstone of both portfolios and Canada’s housing system. The recent market pause appears to be just that – a pause. The combination of easing monetary policy, chronic housing shortage, and stable rental cash flows bodes well for multi-family investment performance through the rest of the decade.

Outlook and Forecasts Through 2029

National Rental Market Trajectory: Over the next five years (2025–2029), Canada’s multi-family sector is expected to navigate through this period of rebalancing and then resume a growth trajectory, albeit at a more measured pace. The consensus of forecasts (from CMHC and major real estate firms) is that 2025 will represent a cyclical peak in vacancy and trough in rent growth, after which conditions gradually tighten again. Higher vacancy in the short term is viewed as a necessary cooling-off that will ultimately improve housing affordability modestly. By 2026–2027, economic recovery and possibly a return to higher immigration targets could boost demand while construction of rentals slows, leading vacancies to stabilize or decline.

According to CMHC’s Housing Market Outlook, rental markets are expected to ease in the mid-2020s, with vacancy rates rising and rent growth slowing, and then later in the forecast period (by 2027 and beyond) affordability should begin to improve more noticeably. This implies that rent increases remain subdued for a few years, allowing incomes to catch up somewhat. By 2029, we might see rent-to-income ratios slightly lower than today (a positive outcome for renters), but not a dramatic drop absent massive new housing supply.

Vacancy Forecast: Quantitatively, one can envision the national vacancy rate hovering around 4.0–4.5% in 2025–2026, then edging down towards perhaps 3% by 2029. For context, CMHC’s medium scenario projections show most major markets with vacancy rates rising a few tenths of a percent each year through 2025–26, then leveling off. For instance, they forecast Toronto’s vacancy to rise from ~1.5% in 2023 to around 3% by 2025 and then roughly stabilize. Calgary’s vacancy is expected to increase in 2025 and 2026 (after the 2024 jump) as landlords work to lease up new buildings, but should remain below past highs and start tightening once the construction pipeline recedes. On the flip side, some markets like Quebec City and Halifax are predicted to remain extremely tight, barely rising from ~0.9% to 1.5% vacancy by 2027 – they simply aren’t adding enough supply to materially loosen conditions.

So, by 2029, one could imagine a landscape where Toronto and Vancouver might have ~3% vacancy, Montreal ~3–3.5%, Ottawa ~3%, Calgary/Edmonton maybe ~5% if oil cycles or higher supply persist, and smaller markets mostly 2–4%. That would be a more balanced environment than 2022, but still relatively landlord-favorable in many areas.

Rent Growth Forecast: With those vacancy trends, rent growth is likely to remain moderate. After essentially 0% real growth in 2024–25, rents are projected to start rising in line with inflation again by 2026. Expect national rent growth in the low-single-digits (2–3% annually) from 2026 through 2029 in baseline scenarios. This is supported by CBRE’s outlook that for 2025 “rent growth outlook is flat to inflationary” – meaning roughly at inflation (~2%) for most of the market, except high-end new completions which are deflationary. By 2026–27, if inflation is ~2%, rent growth could perhaps slightly exceed inflation in some markets (3–4%) as demand strengthens again and supply additions slow. However, it is unlikely we return to the unsustainable 8–10% annual rent hikes; those were a function of extraordinary circumstances (surge in population + supply chain delays) that are not expected to repeat annually.

CMHC’s forecast for various cities often shows rent growth slowing significantly in 2025 and 2026, then picking up a bit later. For example, Edmonton’s average 2-bedroom rent is expected to rise reasonably strongly in 2025, then slow in 2026 and 2027 as vacancy increases. Regina and Saskatoon similarly anticipate slowing rent growth as new supply comes in. Quebec City is an outlier that’s projected to see rents continue to rise each year because of persistently low vacancy (CMHC forecasts Quebec CMA’s 2-bedroom average rent rising from $1,159 in 2024 to ~$1,300 by 2027, i.e. ~4% annualized).

On a national level, our expectation is cumulative rent growth of perhaps 10–15% from 2025 to 2029 (which is much milder than the ~20%+ jump seen just from 2021 to 2023). This would mean by 2029 the national average rent might be on the order of $1,700–1,750 (up from ~$1,515 now) assuming a steady economy. One risk to that outlook is if inflation re-ignites or construction costs climb again, which could push landlords to try for higher rents. But with rent control in several provinces and political scrutiny on affordability, there will be pressure to keep rent growth in check.

Supply Pipeline & Completions: The pipeline of rental construction will likely crest in 2025 and then decline. We anticipate 2025 will still see a high level of completions (given all that is under construction), possibly even exceeding 2024’s total. By 2026, completions should begin falling sharply because fewer new projects will have started. Industry experts predict new rental deliveries in 2026 could drop by roughly half compared to 2025, as many developers postpone starts in 2024–25. This means 2027–2028 might represent a relative trough in new supply delivered. That could ironically sow the seeds for tighter markets again by 2028–29. Essentially, the cycle is self-correcting: today’s high vacancy and low rent growth lead to tomorrow’s reduced construction, which in turn leads back to low vacancy and higher rent growth a few years later – unless policy manages to smooth it out.

In numbers, annual rental starts (which were ~60k units in 2022 nationally) might dip to perhaps 40k or less during the mid-decade slow period. Housing starts overall are forecast by CMHC to remain above long-term averages but with fewer condos; rental apartments will remain a relatively large share of starts. If the economy improves by 2027, we could see starts pick up again. The federal government’s ambitious housing goals (they talk about doubling housing starts, etc., though that seems unlikely) could also influence supply. One big wildcard: scaling up of modular or factory-built housing – if provinces get serious about cutting costs/time for construction, it could boost supply later in the decade.

Policy and Government Actions: Policy will indeed play a big role through 2029. As mentioned, fiscal incentives (like the GST removal) are in place through 2030. We expect additional measures targeting housing supply: e.g., more funding for affordable housing, low-cost financing expansions, or even immigration policy tied to housing (there have been suggestions to link immigration levels to housing construction rates). On the demand side, policies could include expanded rent supplements or housing benefits to help lower-income renters, which indirectly could support rent growth at the low end. Rent control policies are likely to remain where they are, though some provinces might adjust the specifics (for instance, Ontario’s exemption of new builds from rent control could theoretically be altered if there’s political will, but that would risk discouraging construction further).

Macro Impact: The broad macroeconomic assumption is no severe recessions and a return to moderate growth by 2026. If instead there’s a stronger downturn, multifamily could face a bit more pressure (higher unemployment could cause some increase in non-payment or roommate situations, etc.), but nothing catastrophic – housing is a necessity. If the global economy surprises to the upside, that might mean higher immigration and possibly an earlier return to tighter rental markets. Canada’s federal election by 2025 could also be pivotal: housing affordability is a top issue, so whichever government is in power will be driven to implement visible housing solutions. This could accelerate certain supply initiatives (e.g., permitting reforms or infrastructure support to municipalities to build housing faster).

Affordability by 2029: Will renting be more affordable in 2029 than today? Potentially slightly more, if wages grow and rent growth stays modest. We might see renters’ income growth (hopefully boosted by a better economy) outpace rent increases for a change. That would be a reversal of the last decade’s trend. However, unless there is a massive surge in housing supply well above projections, it’s hard to imagine rents actually decreasing in nominal terms long-term – the demand fundamentals are too strong. The goal is more to have incomes catch up. One encouraging sign: after 2024, Canada’s GDP per capita is expected to resume growth (having fallen with the population surge). If productivity and wages improve, that will aid affordability.

Investor Outlook: From an investor perspective, the 2025–2029 period should bring more stable cap rates and potentially rising values if interest rates indeed fall. Cap rates could compress back toward the high-3% range by late decade in core markets if financing is cheap and rental fundamentals are solid. We might also see portfolio consolidation – larger entities acquiring smaller ones – as the sector matures. International investors might re-enter if the currency exchange or yields look favorable. All in all, multi-family will likely remain the favored asset class in Canadian real estate investing, given the secular demand and relative stability.

Risks: Key risks to the outlook include:

• Economic shocks – e.g., a hard landing recession or a financial crisis – which could temporarily increase vacancies if unemployment spikes (though multifamily historically weathers recessions well).

• Policy missteps – if immigration is ramped up too quickly again without addressing housing, we could end up back in an acute shortage with runaway rents; conversely if immigration is cut too much for too long, demand might stagnate more than anticipated.

• Construction costs and labor – the ability to build needed housing depends on construction industry capacity; labor shortages or high material costs could impede the supply response or make new rentals’ required rents even higher, which could then slow lease-ups.

• Climate/ESG factors – there is increasing pressure to retrofit older buildings for energy efficiency, which could add costs and impact operating expenses; also, certain markets might face climate-related risks (flooding, etc.) that could affect long-term desirability.

Conclusion

By 2029, we expect Canada’s multi-family housing market to have expanded significantly in total units, with broadly higher vacancy than the ultra-tight days of 2022, but still healthy levels around 3% nationally. Rents will likely be higher than today in absolute terms, but growing at a controlled pace in line with incomes (hopefully easing the affordability burden slightly). The core demand drivers – population growth, urbanization, and the affordability advantage of renting – remain intact, so the multi-family sector’s prospects are strong. The current lull in rent growth is a cyclical adjustment that sets the foundation for a more sustainable growth path. For stakeholders: investors can look forward to stable cash flows and asset appreciation potential as interest rates fall; lenders will find multifamily an increasingly attractive lending target with low default risk; and policymakers will see some relief on the housing front, though the fundamental supply gap will require ongoing action. In essence, Canada’s multi-family market is poised to move from an extraordinary crunch to a period of equilibrium – a welcome change that could make the rental market work better for everyone involved.

August 6, 2025 by a collective of authors at MMCG Invest, LLC, multi-family feasibility study consultants

Sources:

• MMCG Data - Canada Market Outlook 2025

• Canada Mortgage and Housing Corporation – 2025 Housing Market Outlook

• CBRE Research – Canada Real Estate Market Outlook 2025

• Avison Young – Q1 2025 Multi-Residential National Report (Press)

• Reuters – Statistics Canada Population Growth 2023

• RENX Real Estate News – Market analysis for Toronto, Montreal, Vancouver

• RBC Economics – GST Removal on Rental Construction Commentary