Nearly half of new projects now offer two months of free rent
Landlords across Canada are now dangling two months of free rent to fill empty units, the sharpest signal yet that the country's 20-month rent slide still has room to run.
The average asking rent fell 4.7 percent year-over-year in May to $2,029, the 20th straight month of annual declines, according to the latest report from Rentals.ca and Urbanation.
Rents inched up just 0.1 percent from April, the report notes, far below the 1.3 percent average seasonal gain for May over the prior five years.
The weakness looks structural, not seasonal.
Canada slipped into a technical recession as of Q1, and the report expects rents to keep facing headwinds into the second half of the year.
As per the report, purpose-built units under construction hit a record of more than 200,000 in Q1, even as demand thins out from elevated youth unemployment and tighter immigration policy.
The demand pullback is striking.
Canada posted its first year-over-year population decline on record in Q1, driven by fewer non-permanent residents, the report says.
Citing Immigration, Refugees and Citizenship Canada, it adds that study permit holders fell from more than 1m in 2024 to 660,000 by March, with new arrivals in the first quarter down 79 percent from 2024.
That supply-demand gap has pushed landlords to compete on price.
Around one in five Rentals.ca listings now carries an incentive, from free rent to cash bonuses, according to Global News, with nearly half of projects offering two months free, an effective discount of about 13 percent.
In the Greater Toronto and Hamilton Area, the share of newly completed projects offering incentives jumped from 32 percent in 2024 to 66 percent.
The report pegs the average GTHA incentive at $379 a month off asking rents.
Rising supply and climbing vacancy rates across major markets have made rental incentives "far more common," said Shaun Hildebrand, president of Urbanation, according to Global News.
He said the promotions cut costs for renters and help managers attract tenants and finish lease-ups in a softer market.
The declines run deepest in the largest provinces, according to the report, with apartment rents down 5.4 percent in BC ($2,328), 5 percent in Ontario ($2,219) and 4.7 percent in Alberta ($1,663).
Vancouver has fallen for 30 consecutive months and now sits 5.6 percent below its May 2022 level.
Nova Scotia, up 2.6 percent to $2,343, overtook BC as the priciest market for apartments and condos, a shift the report attributes partly to falling BC rents and a heavier mix of larger units in the Halifax area.
Condos absorbed the steepest hit among property types, down 6.8 percent year-over-year to $2,076, while purpose-built rents proved most resilient at $2,031, down 3.4 percent.
For all the recent softness, rents remain elevated on a longer view.
The report notes the national average has climbed 22.1 percent since its April 2021 low of $1,662, but has now retreated 7.8 percent from the May 2024 peak of $2,202.
