Few things can be as rewarding as having the keys to your first apartment, and knowing you made the right decision about where to call home. Entering the rental market is an exciting moment, so – congratulations! You’ve made the first step by deciding to look for your apartment and begin your rental journey. If you are feeling lost in the current Canadian rental landscape, there is no need to worry – we’ll take a look at what to expect when expecting to rent your first apartment in 2025.
You may have heard that a benchmark of 30% of your income should go towards housing costs. However, with the fluctuating Canadian rental market, the 30% rule is a great starting point to determine your price range. The average asking rent for all residential properties in Canada was $2,100 in January, declining 4.4% from a year ago. This would require an income of more than $80,000 to keep rent within the 30% range.
For some insight, it’s important to understand that Canada has seen a significant period of population growth, high inflation, and low production of new housing.
This has caused strain on the rental housing market and as a result, more people are competing for the limited rental supply. Furthermore, those living in an apartment are more hesitant about transitioning into home ownership, which creates slower turnover on existing rental suites, lowering the number of available units.
The percentage of available units in a rental property is what is known as the vacancy rate. Across Canada, we currently see a vacancy rate of 2.2% for purpose-built rentals, meaning if you are just starting to look for a rental, we recommend that you afford yourself plenty of time to look before your preferred move-in date, as you may have limited options based on where you want to live. It’s generally a good rule of thumb to begin searching for a rental 60 days out of your desired move-in date. If it’s your first time–especially if you are moving to an entirely new city–you may want to consider giving yourself more time to learn, explore, and consider all possible options. Thankfully, the government is also focused on increasing rental supply by introducing new incentives and tax breaks for property owners.
Our suggestion is to visit Rentals.ca and Urbanation’s National Rent Report to view current listing prices for apartments across the country and in municipalities near you. We strongly recommend setting your expectations properly before entering the rental market as Canada has seen a strong increase in asking rents since the start of 2021. Review your credit score, have your entire finances budgeted, and set proper expectations for what you can afford in the area you want to live in.
Budgeting for your apartment based on its current asking rent is critical; however, looking ahead to rent increases should be just as important. The main factor that will influence your change in rent after your initial lease term has to do with the policy called rent control. In all provinces and territories, rent can only be increased once every 12 months, with landlords providing notice months in advance. In some provinces, the government sets a maximum increase to raise rent. In Ontario for example, rent can only be increased by 2.5% a year. Seems straightforward, right? Well, there is a little wrinkle to it. Buildings constructed after November 15, 2018, are exempt from Rent Control in Ontario, which means if you rent a newer building, you could expect your rent to increase by more than 2.5% a year. It’s important to research the province in which you are looking to rent to ensure you can budget accordingly for the years to come.
While it’s important to acknowledge the changing landscape of rental affordability, it’s equally crucial to recognize the efforts made by property owners to provide safe and comfortable housing options for tenants. The first step in that process is the addition of verified listings on websites such as Rentals.ca. Listings on Rentals.ca that bear the verified badge signify properties where owners have undertaken additional measures to establish their legitimacy. Look for these verified listings for a safe and comfortable rental transaction. For more information on how to avoid common rental scams, visit Rentals.ca’s article for a comprehensive breakdown.
Throughout 2024, Canada’s largest cities, such as Toronto and Vancouver, saw consistent annual rent declines. Following this trend, Calgary and Montreal began registering annual rent declines by the end of the year, with Calgary showing double-digit annual rent increases as recently as early spring in 2024. Renter preferences have quickly changed as working from home has led to a deprioritization of living in downtown metro areas. Turnover rates remain historically low–which limits supply–and the prioritization of moving for affordability should continue in secondary and tertiary markets to increase demand.
As we look ahead, we expect rental demand to remain strong, which indicates prices may continue to increase. However, an anticipated increase in apartment completions, coupled with an uptick in tenant turnover projected for the upcoming year, are poised to inject additional supply into the market in the foreseeable future, thereby mitigating the pace of rent escalation. The demand for studio and three-bedroom apartments has grown rapidly in major Canadian cities, with shared accommodations becoming a favoured choice for both landlords and tenants. Three-bedroom units provide increased flexibility and affordability for families seeking long-term rentals and individuals willing to share rent, while studios are the most affordable option for those new to the rental market and looking to live independently.
You should be excited about entering the rental market as it can be the much-needed step to secure your independence. Many purpose-built rentals offer amenities that can enhance your quality of life such as a fitness centre, event space, coffee shops and rooftop patios. Keep that in mind when looking for an apartment, you are renting much more than just your suite, as many buildings foster a community that you can be proud to be a part of. Property owners also want to invest in you, and allow you to have an incredible experience living in their building.
Understanding the current Canadian rental market is the first step to feeling confident about your choice to rent. We strongly recommend following all updates on the Canadian industry by subscribing to the Rentals.ca National Rent Report.