The rental market is undergoing a dramatic shift, and it’s great news for tenants. After years of skyrocketing prices, the pendulum has swung back in favor of renters, with lower costs and enticing incentives becoming the new norm. Imagine finding your dream apartment in downtown Toronto with three months of free rent and a $500 move-in bonus, or scoring a year of complimentary internet alongside two months of rent-free living in Vancouver. Sounds too good to be true? It’s happening right now.
But here’s where it gets controversial: landlords across Canada are increasingly offering these perks—free parking, waived pet fees, moving allowances—to lure tenants. Why? Because after the post-pandemic rental surge, the market is cooling. Prices are dropping, vacancy rates are rising, and the housing market is shrouded in uncertainty. As Marco Pedri, a Toronto-based broker with Shoreline Realty, puts it, ‘It’s a race to the bottom. Landlords are competing fiercely, driving prices down.’ And this is the part most people miss: this trend isn’t slowing down. With 2025 marking the second consecutive year of record rental housing starts in Canada, experts predict more apartment completions in 2026, giving renters even more options.
‘The math works better for rentals than for large homeownership projects right now,’ explains Mathieu Laberge, chief economist at Canada Mortgage and Housing Corp. But with new listings flooding the market and prices falling, the big question is: will demand keep up in 2026? Some real estate agents argue it already has. Tom Storey of Royal LePage Signature Realty notes that 2025 was a record year for leasing transactions, as buyers hesitated to enter the sales market. ‘The need for real estate hasn’t changed, but people are choosing to lease instead of buy,’ he says. Declining sales prices and lower interest rates have buyers waiting for the market to ‘bottom out,’ while rental prices have dropped significantly—starting rents in 2025 were lower than in 2024 and 2023.
According to Rentals.ca and Urbanation, average asking rents in Canada fell 3.1% in 2025 and are down 5.4% from two years ago. In December alone, rents dropped by 8% in Vancouver, 5% in Toronto and Calgary, 2% in Montreal, and 0.5% in Ottawa. But affordability remains a concern. While the overall average asking rent in Canada last month was $2,060—down 2.3% from a year ago—it’s still nearly 3% higher than three years earlier and 14% above pre-pandemic levels.
Giacomo Ladas, spokesman for Rentals.ca, highlights a double whammy for property managers: a surge in new supply and a relatively small pool of renters. Immigration caps have slowed population growth, and winter months typically cool demand, leading to lower prices and more incentives. ‘We’re expecting even more supply to hit the market, with about 180,000 units under construction across Canada,’ Ladas notes. ‘Vacancy rates are likely to rise.’
The rental market also felt the sting of last year’s economic uncertainty, particularly trade concerns that dampened Canada’s real estate outlook. Potential first-time buyers adopted a wait-and-see approach, holding onto their rentals instead of purchasing. Meanwhile, renters became less willing to pay premium prices, even as developers pushed ahead with purpose-built rental projects. ‘People are staying in their apartments longer, and turnover rates aren’t increasing,’ Ladas observes.
CMHC data shows that average two-bedroom turnover rents declined in major cities like Vancouver, Calgary, Toronto, and Halifax last year. The vacancy rate for purpose-built rentals rose to 3.1% in the fall, up from 2.2% in 2024 and above the national 10-year average. Laberge predicts 2026 will be another renter-friendly year, giving incomes time to catch up to previous rent growth. ‘When turnover rents drop, the market becomes more fluid,’ he explains.
For now, tenants have the upper hand. A more affordable environment allows renters to prioritize location and amenities instead of settling for less. Many are also locking into rent-controlled units while prices are low. ‘I don’t see landlords raising rents drastically this year,’ Pedri says. ‘They’re focusing more on building relationships with tenants than squeezing every penny out of them.’
But here’s the burning question: Is this renter’s paradise sustainable, or will the market flip again? With more supply on the way and demand uncertain, the future is anyone’s guess. What do you think? Are we witnessing a long-term shift in the rental market, or is this just a temporary reprieve for tenants? Share your thoughts in the comments—let’s spark a debate!
