RENTAL STARTS DOMINATE NEW CONSTRUCTION
REMI
Record-high rental construction and more missing middle housing contributed to a notable increase in residential starts in 2025. According to the latest Housing Supply Report, released by Canada Mortgage and Housing Corporation (CMHC), these new builds have eased rental market conditions in many of Canada’s major cities, however, ownership supply, particularly in the condominium segment, continues to face significant challenges.
“This threatens both the availability and affordability of ownership options for Canadians in the medium-term,” said Tania Bourassa-Ochoa, deputy chief economist for the CMHC. “Since construction timelines can span years, a slowdown in starts today sets the stage for future supply constraints.”
"Housing construction increased six per cent year-over-year in 2025 to 259,000 units, however, the ownership market weakened overall."
Toronto: CMHC reports that for the first time this century, rental starts exceeded condo starts in Toronto. As homebuilders shifted away from riskier ownership-based projects, the construction of buildings with three to five units was more prevalent than projects with more than 100 units. Overall, 2025 housing starts fell significantly compared to recent years, but completions remained elevated. This has relaxed market conditions in the near term but could lead to a sharper supply gap and a tighter market in the long term.
Vancouver: The housing market eased in 2025 as weakened demand from slower population growth coincided with record completions after years of strong housing starts. However, the viability of new projects was increasingly under strain, with land scarcity and high costs slowing rental construction and weak pre-construction sales weighing on the condominium market. Densification policies are strengthening missing middle housing, which includes, low-rise apartments, multiplexes, row homes, stacked townhouses, and accessory suites.
Montreal: Rental construction reached record levels and accounted for more than 80 per cent of 2025 starts, while condo starts have fallen to a record low. There is an abundance of supply amid weaker demand, but with housing starts expected to decline, lower completions will put further pressures on affordability.
NEW APARTMENT RENTS STILL SOFTENING
Rentals.ca
Average asking rents for all property types in Canada fell to $2,030 in February, a 33-month low and the 17th month in a row of year-over-year decline. While the rental market tends to slow in the winter months, the seasonal decline in rents was larger than usual this year. On a month-over-month basis, rents fell by 1.3%, the largest monthly decline seen since November 2025 and the largest decrease in the month of February since 2020.
Over the past two years, rents have fallen by 7.4% from February 2024, but remain 2.3% higher than in February 2023.
Average asking rent per square foot remained flat year-over-year at $2.53, but declined 4.2% from February of 2024, when asking rents averaged $2.64 per square foot. In the past two years, the average size of rental units has fallen 6.3% to a low of 826 sf.
As rents continue to soften and average weekly wages show moderate gains, the affordability of rent as a percentage of renter household income has continued to improve. The average rent in February accounted for 29% of average renter household income, down from 31% a year ago and 34% two years ago, and below the standard 30% affordability benchmark.
While asking rents remain above pre-pandemic levels, wage gains have outpaced asking rent increases over a six-year period, resulting in an overall improvement in affordability for Canadian renters.
Three-bedroom rents for purpose-built rental units were up 1.7% over the past year to an average of $2,734, with three-bedroom condo units increasing 3.1% to $2,841. For purpose-built apartments, one-bedroom units saw the largest decline, falling 3.6% to $1,808, while for condos, studio units saw the steepest decline of 7.2% to $1,644.
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MITCHELL CHANG
President & Owner,
Salesperson
Direct: 416-219-0436
mchang@cfrealty.ca
LORENZO DIGIANFELICE, AACI
Broker of Record, Owner
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ldigianfelice@cfrealty.ca
JAKE RINGWALD
Salesperson
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