Can Canadian apartment rents keep falling?
Real estate analyst breaks down outlook for multifamily as population growth reverses and new supply comes online
By David Kitai, Mar 19, 2026
Rents for housing of all kinds have been falling for 17 consecutive months, news that should make renters celebrate and investors worry. The apparent investment case of a constantly growing population, steady GDP growth, and a serious lack of supply have all been undone by curbs to immigration rates, US trade uncertainty, and the completion of a new swathe of purpose-built rental housing. The question for investors and advisors is if there is anything that will arrest this decline in rents now.
Keith Reading believes that this “correction” in rental housing shouldn’t be seen as a long-term trend. The Senior Director of Research at Morguard explained that those drivers that had once sent Canadian rents sky high should return in some form. He noted that while new supply has come online, it comes in the context of a still-ongoing housing shortage. He noted where in rental housing we’ve seen the greatest weakness and the greatest resilience, pointing out how REITs and condo investors have adjusted to the downturn.
“Even now we’re not in a position of oversupply. Yes, vacancy rates have gone up a little bit, there’s sort of an adjustment period underway as a combination of weaker demand and an increase in new supply. And I believe it’s a temporary thing,” Reading says. “If we look at the long-term trends, this is just a sort of blip in what should be an overall strong outlook for this property sector.”
Underpinning Reading’s long-term thesis is the belief that immigration targets will be ramped up again. While he thinks it unlikely that Canada takes in as many immigrants as we saw in 2022 and 2023, the demographic reality remains that this country needs immigrants to grow its population. He notes, too, that with the costs of land, labour, and materials there is very little single family home construction going on. Canadians, especially immigrants, are therefore still seeking multifamily rental housing and a rebound in immigration and overall housing demand should impact rentals first.
During this downturn, Reading notes that the biggest drops have been seen in the most expensive markets, namely Toronto and Vancouver. He expects the broader Greater Toronto Area as well as much of B.C. to remain soft. Rents in those markets had risen past the point of feasibility for many renters, and even new build rentals are now competing for price with older housing stock. Those older buildings have been the most resilient, but Reading notes they come with the issue of renters hanging on for a long time, often meaning much of their supply is currently paying out well below market rates.
Alberta, Reading says, should continue to be the most resilient region for rental prices, thanks to its stronger resource-driven economic engine. Saskatchewan, for similar reasons, should also see some resilience.
In the leadup to the condo crash over the past three to four years, many investors had used individual condo purchases as a means of accessing the rental housing market. Reading notes that many of those smaller landlords are in something of a holding pattern, signing one-year leases in the hopes that demand will pick up. There may be signs of tightening, however, in the form of private investment groups purchasing tranches of condos at a discount with a view to renting them. If more buyers start buying these properties as portfolios of 10 or 20 units, there may start to be tightness in that market as well, Reading says.
REITs, Reading explains, are also adjusting to the rental declines through cost management operations. That could include improving buildings’ energy efficiency or adding new technologies that can help lower the cost base of a property. Many REITs, he adds, are taking a long-term view of the market and hypothesizing that they can outlast an economic downturn, even if rents fall further.
In addition to the likely return of immigration, Reading notes that the new construction that added supply to this market is already beginning to slow. Condo development has been moving at snail’s pace for some time now, but some rental builders are now pausing plans. Reading notes that some of the larger and more established developers are still pushing, but that this reflects, again, that more long-term view of the market. Reading believes that advisors with clients exposed to the rental market, through REITs or condos, ought to promote that same kind of long-term thinking.
“I think it’s not unlike other investments you’ve got to bide your time,” Reading says. “Hopefully advisors told investors when they were acquiring these properties that this is not an investment where you ‘get in for a couple years, make a quick profit and get out,’ it’s a long-term game.”
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