Strong rental demand continued to outpace supply in 2023, according to CMHC’s newly released 2024 Rental Market Report. This resulted in less available purpose-built rental apartments and lower affordability in Canada’s primary rental market.

As per the latest data, released January 31st, the national vacancy rate for Canada’s primary rental market reached a new low of 1.5 per cent in 2023, the lowest recorded rate since 1988 when CMHC began recording a national vacancy rate. Average rent growth for two-bedroom purpose-built units surveyed in both 2022 and 2023 reached 8 per cent in 2023, well above historical averages.

“Again in 2023, strong rental demand continued to outpace supply in communities across the country, making it very difficult for renters to find housing they can afford,” said Kevin Hughes, CMHC’s Deputy Chief Economist. “The vacancy rates and rent increases we are observing are further evidence the current level of rental supply in Canada is vastly insufficient and the need to increase this supply is urgent.”

“Although most Canadian cities saw an increase in rental supply, CHMC says it was not enough to keep pace with the increased demand pressures caused by high population and employment growth."

Although most Canadian cities saw an increase in rental supply, CHMC says it was not enough to keep pace with the increased demand pressures caused by high population and employment growth. Higher mortgage rates and persistently high home prices also continued to make it harder and less attractive for renters to transition to home ownership. As rental demand pushed up, the construction of new rental homes continued to be difficult for home builders facing higher costs for financing and construction materials, along with labour shortages.

In terms of escalating rent prices, average national rent growth for a 2-bedroom purpose-built apartment accelerated sharply to 8 per cent from 5.6 per cent over the previous 12-month period. This new high is well above the 1990 – 2022 average of 2.8 per cent and outpaced both inflation (4.7%) and wage growth (5%).

As purpose-built rental developers in Canada continue to face an increasing number of market challenges, including higher construction costs, government fees, and lending rates compared to a few years ago, housing experts are in agreement that more needs to be done to encourage new rental housing development. Although Canada and the Provinces introduced some promising new measures in 2023, including the Enhanced GST Rental Rebate program, according to a CMHC study released in December, achieving an adequate level of supply would require an investment of at least $1 trillion.

For most rental projects paused or cancelled in 2022, the limited return premiums were what motivated the decision. Meanwhile, developers who decided to move along with their projects saw the need to raise rents to offset increasing borrowing, construction, and development costs as their primary strategy to incur profit.



CMHC estimates that larger-scale developers (1,000+ units) will be responsible for more than three out of four new rental units in the coming years; they also represent roughly nine out of 10 developers that are currently leveraging public sector funding, such as CMHC programs – hence incorporating a greater share of affordable housing units into their portfolios. That said, market rent was mentioned as the most common product strategy.

Partnerships between larger institutional investors, such as pension funds and public companies (REITs), and private developers can allow for reduced upfront cost and greater access to alternative financing. These partnerships are critical moving forward and were mentioned by survey participants as being increasingly leveraged to build new rental housing.

“Larger-scale developers are seemingly putting more focus into creating affordable housing opportunities,” CMHC analysts noted. “Collaboration and partnerships between different development typologies and investors will be foundational in the future rental housing development ecosystem.”




Real gross domestic product (GDP) edged up 0.2% in the fourth quarter of 2023, following a 0.1% decline in the third quarter. In the fourth quarter, higher exports and reduced imports fueled GDP growth, but this was moderated by a decline in business investment.  Final domestic demand, composed of expenditures on final consumption and gross fixed capital formation, edged down 0.2% in the fourth quarter, after a 0.2% increase in the previous quarter. On an annual basis, real GDP and final domestic demand rose for the third consecutive year since the COVID-19 pandemic-induced contraction in 2020. However, outside of 2020, real GDP in 2023 rose at its slowest pace since 2016.

Housing investment was down 0.4% in the fourth quarter, a sixth decline in the last seven quarters. Despite increased activity in new construction (+2.2%) and renovations (+0.2%), the resale market weakened across Canada, which offset increased housing investment, as ownership transfer costs fell 7.7% in the fourth quarter. Single units and apartments led the increase in new construction, as all provinces and territories, except Prince Edward Island, saw an increase in housing starts.

Real business investment declined for the sixth time over the last seven quarters. Investment in non-residential structures fell 3.0% in the fourth quarter, owing to decreased expenditure on engineering structures. Investment in machinery and equipment (-1.4%) continued to decline in the fourth quarter, largely because of lower spending on aircraft and other transportation equipment, which coincided with a decline in imports of aircraft.

Business spending on intellectual property products edged down 0.2% in the fourth quarter, while lower spending on mineral exploration (-2.2%) was partly offset by higher spending on research and development (+3.5%).

Businesses continued to add to their inventories in the fourth quarter (+$30.4 billion) but at a slower pace compared with the third quarter (+$34.7 billion). The moderating impact of lower accumulations in retail and wholesale trade inventories were partly offset by higher manufacturing inventories, particularly refined petroleum, primary metals, machinery and motor vehicles. While investment in non-farm inventories slowed in the fourth quarter, this was partly offset by an accumulation of farm inventories amounting to $3.6 billion. The economy-wide stock-to-sales ratio, the stock of business inventories as a proportion of aggregate demand, reached 1.079 in the fourth quarter. Excluding inventories of gold and other precious metals, the ratio stood at 0.936.






Asking rents for all residential property types (in newer buildings) in Canada reached another record high in January 2024, increasing 10.0% annually to an average of $2,196. Rents increased 0.8% month-over-month, pushing the annual rate of rent growth to a four-month high.  By property type, average asking rents for traditional purpose-built rental apartments increased fastest over the past year, rising 13.5% to $2,107. Condominium rentals, which were relatively more expensive and generally newer than most purpose-built rentals, averaged $2,372 in January, rising 4.1% annually. Asking rents for house rentals increased 5.6% year-over-year to an average of $2,352.

One-Bedroom Apartment Rents Increased 13%

Asking rents for purpose-built and condominium rentals increased 11.6% in January 2024 to reach a record-high average of $2,146.

One-bedroom apartments continued to experience the fastest annual growth at 12.6% in January, compared to two-bedroom asking rents increasing by 11.0% over the past year to an average of $2,334 for purpose-built and condominium rentals. Three-bedroom rents averaged $2,638 and increased 11.6% from a year ago, while studio rents increased 11.8% annually to an average of $1,595.

Roommate Rents Reach Record High of Over $1,000

Across four provinces in Canada, average asking rents for shared accommodations increased 18.5% annually to a record high of $1,010 in January. B.C. led with roommate rents averaging $1,158, closely followed by Ontario roommate rents averaging $1,109. In Quebec and Alberta, shared accommodations had average asking rents of $913 and $871, respectively.

Roommate asking rents were highest in Vancouver and Toronto at $1,338 and $1,311, respectively. This was followed by Ottawa ($988), Montreal ($949) and Calgary ($906).


25 LOREN AVENUE - NEWMARKET - $16,750,000 / $250,000 PER SUITE / 3.75% CAP RATE

This is the sale of purpose build concrete rental apartment building with a total of 67 suites.  Built in 1978, this property is 5 stories in height and was a brick exterior, double windows, flat roof and balconies. The building sits on a large 1.60 acre site and rents were 100% below market.  There is surface and underground parking.  The building has a good suite mix  with the average size being around 850 sf.   This property was fully marketed and the buyer was Pulis Investments.

371 LAKESHORE ROAD WEST  - MISSISSAUGA - $7,800,000 / $222,500 PER SUITE / 4.00% CAP RATE

This is a 6 storey free standing concrete rental apartment building containing 35 suites.  Located in the prime Port Credit neighbourhood this property was built in 1970 and has a brick exterior, double windows and flat roof.    There are 29 parking space in total and the building has HWG heating.  The building has one elevator and rents which are somewhat below market.  The property was fully marketed and sold to a private apartment investor.

65 CLOVERHILL ROAD  - ETOBICOKE - $6,7000,000 / $280,000 PER SUITE / 3.00% CAP RATE

This is a 4 storey free standing rental apartment building containing 24 suites on almost a half acre site.  Built in 1975, this concrete building is a walk up with rear surface parking and internal garages.  It has a hot water gas fired heating system and rents include all utilities (except Hydro).  There is on site laundry and lockers.  The building has strong rental upside and was owned many decades by the same owner.  The property was not fully marketed and sold to private investor.



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