Could 2026 be the
year of the renter
?
After 15 straight months of
rental price declines
, the power balance may finally be swinging back into the hands of tenants, something that should come as a relief to cash-strapped Canadians, though not all will be in position to take advantage.
At the end of 2025, the average asking rent for all properties in the country was $2,060 per month, according to rentals.ca, still high by historical levels but below the peak of $2,202 hit in May, 2024.
With slowing demand and a still
growing supply of units coming onto the market
, all signs point to apartment rents continuing their decline throughout the rest of 2026.
“I think this will be an interesting year because by the end of 2025, we had negative population growth, which was pretty surprising,” said Giacomo Ladas, associate director of rentals.ca, which tracks rental prices across the country.
On the supply front, there are still 180,000 units under construction across the country, a small fraction of the existing three-million-plus apartments out there, but significant enough to
impact the market
.
“Vacancy rates are increasing, and for the rest of 2026, supply will outweigh demand,” said Ladas. “I don’t think incentives are going to be going away. Renters are taking a lot more time with their choice because of the slowdown in demand.”
Carl Gomez, chief economist with Centurian Asset Management, which owns a private REIT with 23,000 units, said the market needed that supply after decades of undersupply, but warned that not all of it is hitting the mark.
“There is a lot of excess, which has helped the vacancy rate. But you do have to dig beneath the surface of what is being added, and a good chunk of supply is
not filling the gap for the demand in the market
,” he said, pointing to small one-bedroom units. “They come to market, and they are not necessarily affordable for the average renter.”
Despite rents being down 5.4 per cent over the last year, they remain 14.1 per cent above the levels seen at the end of 2019, according to rentals.ca.
It is an established principle that no more than 30 per cent of your gross income should go towards rent. That would mean an average income of $82,400 just for a typical apartment in Canada, with the figure much higher in Toronto and Vancouver. So, yes,
we are still talking about affordability
.
It’s not a real shock to see groups like the Association of Community Organizations for Reform Now, or ACORN, opposed to even a modest 2.1 per cent guideline increase for rent in Ontario. People just can’t afford that in some parts of the rental world.
The picture, though, may be worse for landlords, whose profits don’t look all that tangible today, and who are seeing the value of their holdings weaken in a softer market.
There is nothing particularly spectacular about returns in the multifamily sector, with cap rates or the return on investment pegged at anywhere from 4 per cent to maybe 5.25 per cent in some Canadian cities, according to real estate firm Avison Young.
Investment demand has climbed from private-sector buyers who see long-term upside in rents, if not in 2026. Caught in the middle are
publicly traded REITs
dealing with market values today, with unit prices depressed and sinking.
In the last six months, we have seen two Ottawa-based REITs, InterRent and Minto Apartment, which together have close to 25,000 units, looking to go private because they have been so badly valued in the public markets.
Mario Saric, an analyst with Scotia Capital, kicked off a report on the investment bank’s 21st apartment panel by saying there might not be a 22nd next year.
“(The) long-term fundamental picture is good,” Saric said in his report. “New supply growth should decelerate a lot in 2027 and beyond, particularly as it
pertains to new condo deliveries
. Despite a narrowing in the premium cost of owning vs. renting, rental is still financially more appealing, in our view, particularly with limited prospects of material home price gains.”
Even if house prices are not dropping as precipitously from a peak in 2022 when the Canadian Real Estate Association’s house price index was more than $800,000, they are still falling and are well below $700,000 today. There is no fear of missing out on the housing market.
Sam Kolias, executive of Western Canada’s largest REIT, Calgary-based Boardwalk, said there is a lot of choice for renters, which he called good news.
“A stable, affordable housing market is great for a growing economy,” said the real estate executive, who thinks it is time for the government to ease immigration policy. “There are more than enough apartments to let good, keen international students back. It will help our university budgets, and it will help our economy.”
As for REIT valuations, he wonders how long public entities can continue trading when private investors will buy them out and value them higher.
Kolias and others think that while market conditions are creating more supply, those days may be short-lived. Rising costs and shrinking demand are driving away new construction, and there are few assurances that future market conditions will continue to favour renters.
New condo sales in the Greater Toronto Area dropped to their lowest level since 1991 in the last quarter of 2025, and research firm Urbanation noted a record-breaking 28 projects were cancelled last year, developments that would have added 7,243 units in Canada’s largest city.
A large percentage of condos are owned by investors and end up in the rental market, so the supply will slow down. And while some condo projects have been converted to rentals, the market will likely see fewer such conversions.
“By 2029, virtually no new condos are expected to be delivered,” said Urbanation.
Rentals.ca’s Ladas said that as asking rents continue to drop, more and more renters on the apartment continuum will see an opportunity to get a cheaper place and potentially move.
That’s a great story for renters in 2026 — but don’t expect it to last much beyond that.
• Email: gmarr@postmedia.com
