Demand Surges for Rental Housing in Canada

Despite a marked increase in rental supply, the national vacancy rate for purpose-built rental apartments fell from 3.1 per cent to 1.9 per cent in 2022

CMHC’s latest Rental Market Report indicates that Canada’s vacancy rate in 2022 reached its lowest level since 2001, reflecting widespread tightening across the country including in the three largest rental markets of Montréal, Vancouver, and Toronto.

The surge in rental housing demand in the country reflected higher net migration and homeownership costs. Higher mortgage rates, which drove up already-elevated costs of homeownership, made it harder and less attractive for renters to make the transition.

“Lower vacancy rates and rising rents were a common theme across Canada in 2022. This caused affordability challenges for renters, especially those in the lower income ranges, with very few units in the market available in their price range,” said Bob Dugan, CMHC’s chief economist. “The current conditions reinforce the urgent need to accelerate housing supply and address supply gaps to improve housing affordability for Canadians, as stated in our report: Housing Shortages in Canada: Solving the Affordability Crisis.”

Average Rent Growth

The overall average rent growth for twobedroom purpose-built apartments common to 2021 and 2022 surveys was 5.6 per cent. This is a new annual high, well above average rent growth recorded between 1990 and 2022. Higher rent growth for two-bedroom purpose-built rents was widespread across Canada. The new data also indicates that the average rent growth for two-bedroom units that turned over to a new tenant was well above rent growth for units without tenant turnover (18.3% vs. 2.9%). This increased affordability challenges faced by renters trying to enter the market or find new housing.

Meanwhile, rental condominiums accounted for 19.3 per cent of the total stock of rental units across major centres. In Vancouver, Calgary and Toronto, more than a third of all rental supply are rental condominiums. While overall rental condo supply increased by 7.2 per cent in 2022, the average vacancy rate for these units remained low at 1.6 per cent (compared to 1.8 per cent in 2021).

Report highlights:

• The primary rental apartment vacancy rate in Toronto fell to 1.7% in 2022, from 4.4% the previous year. Fewer disruptions to economic activity and immigration in 2022 resulted in a surge in rental demand.

• Strong demand in the Montreal rental market pushed the vacancy rate down from 3.7% in 2021 to 2.3% in 2022. Rent increases were also significant, especially for renters who moved.

• In Vancouver, the vacancy rate decreased from 1.2% in 2021 to 0.9% in 2022. Higher homeownership costs and migration to