The Canadian rental landscape is experiencing a significant shift as asking rents continue their downward trajectory. According to the latest Rentals.ca and Urbanation report, February marked the fifth consecutive month of declining rental rates nationwide, creating breathing room for tenants after years of steep increases.

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National Rental Trends Show Consistent Cooling

The national average asking rent dropped to $2,088 in February, representing a 4.8% decrease compared to February 2024. This figure stands as the lowest reported average since July 2023 and marks the steepest year-over-year decline since April 2021 during the pandemic.

Average asking rents have now declined by $105 each month over the past year, representing a complete reversal from the previous period when the average asking rent increased by $209 monthly between February 2023 and February 2024. The February data reveals the fifth consecutive month of decline in the national rental averages.

"Rents in Canada are softening as supply is outweighing demand," explains Urbanation President Shaun Hildebrand. "Apartment completions are currently running at record highs, while at the same time, population growth has slowed and the economy faces heightened risks due to a potential trade war with the US. Expect rents to continue decreasing in the near-term as these trends likely remain in place."

Despite recent decreases, rental rates remain 5.2% higher than two years earlier in February 2023 and 16.9% above pre-pandemic levels from February 2020, indicating that while relief is coming, rental costs remain historically elevated.

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Property-Specific Performance Analysis

The condo rental segment has experienced the most pronounced softening, with average rates falling 7.6% year-over-year to $2,192 in February—reaching a 26-month low and marking the sixth consecutive month of decline. The breakdown by unit type reveals:

• Studio condos: Down 10% year-over-year
• One-bedroom condos: Down 8.8% year-over-year
• Two-bedroom condos: Down 7.6% year-over-year
• Three-bedroom condos: Down 3.5% year-over-year

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Purpose-built apartment rentals showed more resilience, declining just 1.9% year-over-year to an average of $2,070. The unit-by-unit analysis shows a more varied pattern:

• Studio apartments: Increased 1.4% year-over-year
• One-bedroom apartments: Down 2.3% year-over-year
• Two-bedroom apartments: Down 2.7% year-over-year
• Three-bedroom apartments: Increased 3.8% year-over-year

This divergence between condo and purpose-built apartment performance suggests different market dynamics affecting each property type, with purpose-built rentals demonstrating greater stability, particularly for studios and family-sized units.

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Regional Market Variations Across Canada

• Ontario experienced the most substantial rent decline among provinces, with average rates decreasing 4.2% year-over-year to $2,329. Toronto specifically saw a 6.7% year-over-year drop to $2,615, though rates remained stable month-over-month. This represents a significant correction in Canada's largest rental market.
• British Columbia recorded a milder 1% annual decline to $2,457. Vancouver's average asking rent fell 4.8% year-over-year to $2,870—reaching its lowest level since April 2022 and representing nearly a three-year low. This cooling in one of Canada's historically most expensive rental markets suggests broader market shifts.
• Alberta presented a mixed picture, with a slight 1.4% annual increase provincially to $1,732. However, Calgary posted Canada's steepest urban decline at 7% (average: $1,916), while Edmonton bucked the trend with a 2.9% year-over-year increase to $1,531. This divergence within the province highlights the localized nature of rental markets.
• Montreal saw rents decline 3.0% to $1,974, while Ottawa experienced a minimal 0.2% decrease to $2,217. These more modest declines in Quebec and the nation's capital region indicate varying regional impacts of the cooling trend.

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Shared Accommodations Market Data

The roommate rental market showed similar cooling trends, with average shared accommodation rents falling 4.6% year-over-year to $964. Listings for shared accommodations were down 29% month-over-month and 0.6% year-over-year, indicating reduced activity in this segment.

Across the four tracked provinces for shared rentals:

• Toronto: 8.2% decline to $1,176 (steepest drop among major markets)
• Montreal: 8.0% decrease to $870
• Vancouver: Experienced similar downward pressure
• All markets in British Columbia, Alberta, Ontario, and Quebec showed year-over-year declines to varying degrees

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Historical Context and Future Outlook

The current trend represents a dramatic reversal from February 2024, when asking rents increased 10.5% annually. This market correction comes after sustained periods of double-digit rent growth that characterized the post-pandemic recovery period.

With record-high apartment completions continuing to enter the market and population growth slowing across Canada, industry experts anticipate further rent decreases in the near term. The potential economic impact of trade tensions with the United States adds another layer of uncertainty that could further dampen rental demand.

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Implications for Rental Market Participants

For renters, this sustained cooling trend provides the first significant relief in over two years, with more options and improving affordability across most market segments. However, rental costs remain substantially higher than pre-pandemic levels.

For property investors and landlords, the evolving landscape suggests a need for adjusted expectations regarding rental income and potentially longer lease-up periods. Property managers may need to implement more competitive pricing strategies as the supply-demand balance shifts in favor of tenants.

For developers, the current market conditions may impact the feasibility calculations for new purpose-built rental projects, potentially affecting future supply pipelines if the softening trend continues beyond the short term.