Canada's Multifamily Rental Market Shows Signs of Stabilization in Q2 2026

📅 2 weeks ago

The Canadian multifamily rental market is showing signs of stabilization, with a slight increase in rents and a decrease in vacancy rates, though challenges remain in certain provinces.

In the second quarter of 2026, Canada's multifamily rental market exhibited signs of stabilization after nearly two years characterized by rising vacancies and decreasing rents. Recent data compiled by Yardi indicates a sector that is moving towards a more balanced state, marked by moderate growth and varied performance across different markets. Notably, the national average rent for in-place units saw a modest increase of just $6, bringing the average to $1,774. This marks the smallest quarterly rent increase since the second quarter of 2021. Year-over-year, the rent growth registered at 2.2%, which is less than half the growth rate observed a year prior and represents the lowest year-over-year figure since the fourth quarter of 2021. The bulk of this rent growth is attributed to renewal leases, as new lease rates have unfortunately slipped into negative territory.
Halifax has emerged as a standout market, showcasing a significant year-over-year rent increase of 5.7%, equating to $93. Other markets such as Winnipeg, Montreal, Hamilton, and Ottawa-Gatineau also reported positive growth rates of 3.6%, 3.4%, 2.7%, and 2.6%, respectively. Conversely, Calgary was an outlier, experiencing a 1.9% decline in in-place rents, amounting to a decrease of $36.
The situation for new lease pricing tells a more challenging story, as the national lease-over-lease rates, which reflect what landlords can charge for units that turn over, have been on a downward trend for two consecutive quarters. Nationally, these rates fell by 0.6%, although this was an improvement from a 1.0% drop recorded in the first quarter. The decline is particularly pronounced in Ontario, British Columbia, and Alberta, where an oversupply of rental units combined with affordability pressures has led to a challenging market environment. Kitchener-Cambridge-Waterloo saw the steepest drop in new lease pricing at 4.5%, followed by Toronto at 2.8%, Calgary at 2.2%, and Vancouver at 2.0%. In contrast, Halifax reported a 2.5% increase in new lease rates, with Ottawa-Gatineau, Hamilton, and Winnipeg also showing improvements.
A key highlight of this quarter is the decline in the national vacancy rate, which fell by 40 basis points to 4.7%. This marks a significant shift after nine consecutive quarters of increasing vacancy rates and represents the first decline since the fourth quarter of 2023. While this rate remains elevated compared to the previous year, it indicates a positive trend. Halifax and Winnipeg reported the lowest vacancy rates in the country at 2.4% and 2.8%, respectively, while Calgary and Edmonton, although improving, still maintained the highest vacancy rates at 6.8% and 5.8%.
Tenant turnover has also seen a slight increase, rising to 26.2% nationally, up from 24.2% a year earlier. The average duration that tenants are staying in their units has increased marginally to 38 months, up from 37 months. The supply dynamics in the market help explain why vacancy rates have been rising for so long, and the potential for relief moving forward. According to BMO Capital Markets' analysis of Statistics Canada data, purpose-built rentals accounted for over half of all housing starts in Canada in 2025, with 113,200 apartment starts making up 50.6% of the total. This trend has strengthened into 2026, with apartments representing 59.1% of the 85,500 housing units started through May.
Deliveries of these units have also increased, surpassing 100,000 for the first time in 2025 and accounting for 45% of all completions that year. As of May 2026, purpose-built rentals constituted nearly half, at 49.9%, of all housing deliveries across the nation. However, there are indications that the supply pipeline may be beginning to narrow, with residential building permits in some markets, such as Halifax, down by 9.7% in the first five months of 2026 compared to the same period in the previous year. This suggests that the current construction boom may not be sustainable indefinitely.
This market shift is occurring amidst a turbulent economic landscape. Canada's GDP contracted in both the fourth quarter of 2025 and the first quarter of 2026, before rebounding with a 0.5% growth in April, reflecting an inconsistent economic recovery. Inflation rates have also increased by 40 basis points to 3.2% in May, driven by rising energy, food, and housing costs, although consumer spending has remained relatively stable. The labor market has been similarly volatile, with a loss of 112,000 jobs in the first four months of the year, followed by a recovery of nearly all those jobs in May and June. Notably, sectors like construction, transportation, and warehousing have added jobs, whereas manufacturing has seen a decline of over 60,000 jobs since January 2025 due to ongoing tariff impacts.
As of June, the national unemployment rate has eased to 6.5% from a peak of 7.1% last September, with youth unemployment, a significant factor in new household formation, falling by nearly two points since the fall to 12.7%. Additionally, policy measures are beginning to align with supply issues in the housing market. Both the federal government and British Columbia have committed up to $1.6 billion over the next decade to stimulate multi-unit housing development, which includes reducing development charges and enhancing infrastructure such as water, wastewater, and local roads. Ottawa is also planning to acquire up to 2,200 vacant condominium units to convert them into affordable housing. While the specifics regarding provincial development tax and fee rebates are still being finalized, the overall direction suggests a move towards stability in the market.

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