Canadian Multifamily Housing Market: 2025–2029 Outlook

Canada’s rental apartment sector has begun to rebalance after a period of extreme tightness. Nationally, vacancy rates have climbed from post‑pandemic lows (around 1–2%) to roughly 3–3.5% today. For example, our data reports a Canada‑wide vacancy near 3.5% in mid‑2025c, and CMHC shows purpose‑built rental vacancy climbing to 2.2% in 2024 (from just 1.5% in 2023). Underlying this softening is a surge of new supply: nearly 230,000 housing starts in 2024 (urban and rural), driven by historically high multi‑unit construction. Statistics Canada confirms population growth has slowed sharply – Q4/2024 growth only 0.2% – as the government cut immigration targets and net non‑permanent residents fell for the first time in three years. Weaker demand (slowing household formation, a cooling jobs market, stagnant real incomes) is meeting unusually elevated supply (Condos and rentals under construction) – a classic pivot toward balanced or even softening conditions.

Overall, national rent growth has waned. Data indicate asking rents are flat or down (national average asking rent growth about –0.4% year-over-yearfile-rwascv611yi1p5jje7qb7c). CMHC’s fixed‑sample rent index similarly shows rent inflation slowing (2‑bedroom rents ~+5.4% in 2024 vs. +8.0% in 2023). In municipalities with strict rent controls (Ontario, BC, Quebec), headline growth on existing tenancies is limited (Ontario’s 2025 guideline is just 2.5%, BC’s 3.0%). As a result, turnover rents (for new leases) are carrying most increases, while older leases rise at capped rates. With incomes barely keeping pace with inflation (real median household income is still below pre-pandemic levels), affordability pressures remain acute: homeownership remains out of reach for many, so demand for renting (especially entry-level units) is historically high, even as overall growth slows.

On the supply side, new construction is at multi-decade highs. We estimate roughly 100,000+ purpose‑built rental units are under construction nationwide (a multi‑decade record), supplemented by a booming condo pipelinefile-rwascv611yi1p5jje7qb7c. In the first half of 2024 alone, nearly 39,000 apartment completions were delivered (over 60% of the prior year’s total) and over 70,000 completions are projected for 2024 – setting a new record. This influx of supply has lifted vacancy. CMHC notes that in Vancouver and Toronto, large new rental and condo‑for‑rent completions eased the market – e.g. City of Toronto vacancy rose to ~2.3% in 2024(versus ~1% prior), and new suburban GTA rentals hit 3.3%. Even high-end new units often struggle to lease up quickly: Class-A apartments now see vacancy approaching 10% in Toronto’s new stock. With this record supply coming on line, rent growth is slowing or turning flat in many metros.

Regional differences remain pronounced. Major markets like Vancouver and Toronto still have the tightest stock, but are loosening rapidly. Vancouver’s overall vacancy is still only about 1.6% (tight by historical norms), but new downtown projects are pushing it higher and average rent growth (about +5–6% recently) is cooler than a year ago. Toronto CMA (City + suburbs) saw vacancy rise into the low‑2% range in 2024 and urban rents growing only a few percent (CMHC: 2‑bedroom rents +2.7% in 2024, lowest among large metros). In contrast, Calgary and Edmonton have much higher vacancies (Calgary ~4.8% as of 2024, Edmonton ~3.1%) and had seen double‑digit rent growth until supply caught up. (CoStar’s Q1/2025 snapshot shows Calgary vacancy ~6.7%, Edmonton 4.7%file-rwascv611yi1p5jje7qb7c). Alberta’s markets benefitted from rapid in‑migration and lagging supply earlier, but now completions are flooding the market: Calgary saw its purpose‑built stock grow 10% in 2024, and average rent growth decelerated though still among the country’s highest. Conversely, Ottawa–Gatineau and smaller Ontario markets remain relatively tight: Ottawa’s vacancy only ~2–2.5% and 2‑bedroom rents rose +5% in 2024 (fastest since 2020), but record apartment completions there mean vacancy ticked up slightly. The Greater Golden Horseshoe ex‑Toronto (e.g. Hamilton, Niagara) similarly has lowish vacancies (~3%) and growing supply.

Supply pipelines reflect these differences. Vancouver has an especially large pipeline: over 22,000 units under construction (≈15% of existing stock. Toronto’s pipeline is also huge (~36,000 units, ≈8.8% of stock), driven largely by condo‑to‑rental projects. Calgary and Edmonton each have 5,400+ units underway (~6–7% of stock), reflecting both new rentals and condo conversions. Ottawa, Hamilton and other Ontario centers have a few thousand each (≈3–4% of inventory). Over half of all new apartments completing in 2022–24 were condos originally planned for sale, so current market conditions will likely push many of those into the rental pool (roughly 50% of condo pre‑sales in major cities end up renting).

Key drivers of demand are mixed. Demographics were an enormous tailwind through 2023 (Canada’s population grew 3.1% that year, largely on immigration), but this momentum is ebbing. The federal government has trimmed immigration levels (PR targets fall from 500K to 395K by 2025 and non‑permanent entry rules tightened), and Statistics Canada shows net non‑permanent resident inflows collapsing (Q4/2024 saw a decrease of 28,000 foreign students/permit holders). Since international migration drives ~98% of growth, the slowdown in new arrivals will weigh on rental demand. Household formation by young adults is also constrained: many graduates face higher housing prices and a weaker labour market (unemployment ~6.9% as of mid‑2025, especially among youth), so some remain doubled‑up. The end result: rental demand growth may be only 1–2% annually in the next few years, down from 3–4%+ recently.

Government policy has both direct and indirect effects. The federal National Housing Strategy is channeling funds into affordable and non‑profit rental (e.g. Canada’s Apartment Construction Loan Program has committed ~$23B for nearly 60,000 units, and $40B total across programs to boost supply). While this adds to “below‑market” rental stock, it has limited impact on market rents. Provincially, rent control remains stringent in many core markets: Ontario and BC limit annual increases (2.5% and 3.0% for 2025, respectively), Quebec’s guidelines are similarly low, and many cities forbid vacancy decontrol. These policies cap revenue growth for existing landlords, making older buildings less attractive to investors and encouraging new development in jurisdictions without strict controls. In Alberta and Saskatchewan, for example, rents are market‑driven (no control), which partly explains the earlier strength in rent growth there.

Financial conditions are another driver. After roughly two years of rate hikes, the Bank of Canada’s policy rate has peaked at 4.75% and was cut to 2.75% by mid‑2025. Borrowing costs for multifamily investors surged (5‑year fixed CMHC mortgage ~4%, plus risk spreads), but began easing late 2024. As of mid‑2025, analysts expect only modest further cuts (some forecasts see two 25bp cuts in 2025) before rates level near 2.25–2.50%. In short, financing will likely remain more expensive than the ultra-low rates of the 2010s, but cheaper than the 5–7% bills seen in 2023. This has elevated capitalization rates: suburban multifamily yields are around 4.5–5% nationally (Altus Group reports “suburban multiple-unit residential” cap rates near 4.60% in late 2024). In core urban areas (Toronto, Vancouver), cap rates are closer to 5–6%, reflecting higher land costs and tighter markets. Overall, the broad cap‑rate spread (cap rate minus 5‑year Government bond yield) has normalized back toward historical norms, after spiking in 2022.

Investment trends to date reflect caution. Total Canadian CRE volume was modestly down in 2024 (Altus: ~$50.5 billion, –8% YoY), as many investors adopted a “wait‑and‑see” posture amid economic uncertainty. Multifamily remained favored relative to many other sectors, but even apartment deal flow slowed. Some large portfolios changed hands, but overall sale prices per unit are flat or slightly down. Importantly, a relocation of capital flows has occurred: Alberta’s multifamily has become a prime target. Institutional data show Edmonton and Calgary drew 23% of Canada’s multifamily investment in mid‑2024, up from ~5% two years earlier. The Alberta markets now offer higher income and projected rent growth (driven by strong population gains and still‑reasonable rents) and are generally free of tenant controls. By contrast, Toronto/Vancouver deals were harder to get done at previous valuations. Lenders have tightened LTVs, and government measures (e.g. vacancy decontrol rules) keep yields elevated on older assets.

Forecast (2025–2029): We expect continued slow absorption and a gentle rise in vacancy in the near term, as much of the heavy pipeline from 2022–24 completes by 2025–26. Based on CoStar’s projections and our analysis, stabilized vacancies may creep into the 3.0–4.0% range by mid‑decade. Rents will likely see low single‑digit growth initially (flat to +2% in 2025–26), as weak demand meets ample new supply. However, by the late 2020s the balance should begin to tighten again. If immigration rebounds (IRCC targets rise again to ~411K+ by 2026 and beyond) and the economy stabilizes, rental demand can reaccelerate to absorb much of the new stock. CoStar forecasts national average rent per unit rising to about $1,665 by 2029 (up from ~$1,536 in 2025) implying ~1.9% annual growth toward the end of the period (somewhat below recent inflation rates). Vacancy in their models moves up to roughly 3.6% by 2029 – still above today’s level but far from a glut.

Regionally, outlooks diverge. Alberta markets are expected to tighten as the surge of new economic migrants and gradually slowing supply growth lift occupancy. IPA forecasts vacancy in Calgary and Edmonton will fall further from current highs. Prairie and smaller markets (Regina, Saskatoon, etc.) should also see modest demand if national migration stays high (some newcomers head to smaller cities), though these markets have less pipeline. In Ontario/BC, core cities (Toronto, Vancouver) will likely remain relatively softest for a time: high inventory of new condos and slower immigration may keep vacancies a bit higher (roughly 3–4%) and rents muted. By contrast, secondary Ontario markets (Ottawa, London, Hamilton) should see steadier fundamentals. Overall, we expect national rent growth of roughly 3–4% per year by 2028–2029 once demand recovers and supply growth moderates, but earlier in the cycle it will be nearer 0–2%.

On investment, we anticipate gradual healing. If interest rates indeed fall modestly (to ~2.25–2.50%) and inflation stays contained, capital markets should regain confidence. By 2026–27 transaction volume in multifamily is likely to pick up, as deferred buyers re‑enter the market. Cap rates may compress from their peaks as bid-ask spreads narrow, though they will stay well above pandemic lows. We expect cap rates on stabilized 4–5%+ BAs (more for A quality) by 2029 – somewhat above the ~3–3.5% seen in 2020–21 but down from mid‑5’s today. Newer properties (4‑5 star rentals) should trade at lower yields (4–5%), while older, rent‑controlled assets might require closer to 6–7%. Financing will remain selective: lenders will demand fuller pre-leases on new projects and deeper equity buffers. However, the fundamental case for multifamily (diversified income, inflation hedge) should keep it a core target of institutional and global capital through the forecast period.

Outlook summary: The next four years look like a rebalancing phase. Record construction in 2022–24 will boost vacancy and sharply slow rent growth through ~2026. Key inflection points include immigration policy (tighter rules now, possibly loosened by late 2020s) and monetary policy (likely modest easing by 2026). By 2027–2029, as the huge supply wave subsides and economic/demographic tailwinds reassert (immigration, wage growth), conditions should normalize to balanced markets. Prices and rents will grow more predictably, especially outside the overheated core markets. Investors and developers should prepare for near‑term softness (and capital pressure), but also for a return to healthier fundamentals and modest rent/rental rate appreciation by the late 2020s.

Sources:

• Statistics Canada. Demographic Estimates — Quarterly (Q4 2024) and Labour Force Survey (2024–2025).Population‑growth components, household formation trends, employment levels, and unemployment rates.

• Bank of Canada. Monetary Policy Reports (October 2024, April 2025) and Policy Rate Statements (2024–2025).Interest‑rate trajectory, inflation outlook, and financing‑cost context for multifamily investors.

• Altus Group. Investment Trends Survey (Q4 2024).Cap‑rate benchmarks, transaction‑volume trends, and investor sentiment across Canadian real‑estate asset classes.

• Institutional Property Advisors (IPA Canada). Canadian Multifamily Outlook (2024 Edition).Forecast assumptions for Alberta markets, capital‑flow analysis, and absorption expectations.

• Ontario Ministry of Municipal Affairs & Housing. 2025 Residential Rent Increase Guideline (2.5 %).Provincial rent‑control parameters affecting revenue growth in Ontario.

• British Columbia Residential Tenancy Branch. 2025 Annual Rent Increase Limit (3.0 %).Rent‑control framework for BC purpose‑built rentals.

• Immigration, Refugees and Citizenship Canada (IRCC). 2025–2027 Immigration Levels Plan.Planned permanent‑resident targets and non‑permanent‑resident policy changes shaping future population growth.

• National Housing Strategy / Canada Mortgage and Housing Corporation. Rental Construction Financing Initiativeportfolio statistics (2024 update).Federal supply‑side programs and funding volumes for new affordable and market‑rate rental units.

• Municipal Planning and Building Department reports (Toronto, Vancouver, Calgary) — 2024 development‑pipeline disclosures.