Canada is in the middle of a rental super‑cycle. Purpose‑built rentals (PBRs) have taken the driver’s seat in new apartment construction, incentives are stacking, and supply is finally landing in the tightest markets. Yet the core reality hasn’t changed: vacancy is still low, renter affordability is strained, and underwriting mistakes are costly. Below is a clear, up‑to‑date map of what’s happening—and a practical toolkit for developers, lenders, and owners.
Snapshot of today’s market
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Vacancy has edged up, but remains tight. National PBR vacancy rose to ~2.2% in 2024 from 1.5% in 2023, still below the 10‑year average (~2.7%).
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Big‑city context: Toronto (city) is sitting near 2.3%, while Metro Vancouver is around 1.6%—the highest in a decade outside 2020, but still “full” by market standards.
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Rents: slower growth, not a reset. Paid rent on a fixed sample of 2‑bedroom PBRs grew ~5.4% in 2024 (down from a record 8% in 2023). Turnover suites still command ~23% higher rents than sitting tenants, a sign of persistent demand.
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Construction is really about rentals now. In H1‑2024, nearly half of apartment starts were PBR—the highest share CMHC has on record. In the six largest CMAs, H1‑2024 starts totaled ~68,600, with the increase largely driven by rental projects.
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Costs have cooled. Residential building construction costs were up ~3.4% year‑over‑year in Q1‑2025, a far cry from 2022’s spikes.
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Asking rents in 2025: Leading listing data show modest year‑over‑year declines in national asking rents through mid‑2025 as new supply hits lease‑up. This is a listing‑market signal (asking), not paid‑rent data.
What’s powering the surge
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Incentives that pencil: The enhanced GST/HST rebate on new long‑term rentals (construction start window runs through 2030) materially lifts returns; Ottawa’s fiscal watchdog pegs the forgone GST at ~$5.8 B over 2023–29.
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Financing that stretches: CMHC multi‑unit insurance backed ~283,000 rental units in 2024, with ~179,000 under MLI Select and ~43% of the insured units tied to new construction—a powerful tailwind for PBR starts.
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A gentler cost backdrop: With construction‑cost inflation easing, fixed‑price contracts and contingencies are more manageable, bringing projects that stalled in 2022–23 back into play.
The 2025 pain points
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50‑year amortizations magnify small errors. Under MLI Select, a 1‑point miss on rent growth or a quarter of unexpected concessions can sink DSCR.
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Synchronized lease‑ups. Thousands of suites are hitting the market at the same time in Toronto and Vancouver; mis‑reading absorption can blow up marketing budgets and NOI.
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Evidence beats opinion. CRA/CMHC/municipal programs increasingly expect third‑party, time‑stamped market evidence to support pro formas and rebates.
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Data deserts outside the Big‑6. Yield is compelling in Calgary, Halifax, Québec City, Windsor/Saskatoon—but comps are thin and lagging.
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Climate is now a column in the rent roll. Lenders are layering flood, wildfire, and heat scenarios into underwriting and portfolio reviews.
How to win this cycle (and where Gnowise helps)
1) Underwrite with defensible rent curves
Replace subjective rent surveys with unit‑level Rent AVMs and 12–24‑month forecasts so DSCR/IRR hinge on data, not guesswork. Attach the forecast series to CMHC/IC packages for transparency.
2) Model lease‑up like an operator, not a spreadsheet
Build scenarios for absorption by sub‑market, seasonality, and concession length. Update weekly as competitor deliveries and pre‑leasing data shift.
3) Get audit‑ready on day one
Centralize every market assumption (rents, absorption, comparables) with time stamps and exportable evidence for GST/HST rebate files, MLI Select submissions, and municipal affordability covenants.
4) Go beyond the Big‑6 with confidence
Use postal‑code‑level intelligence to find pockets where forecast rent growth still outruns construction‑cost inflation—even when legacy comp sets are sparse.
5) Climate‑adjust income, not just cap rates
Overlay flood, wildfire, and heat risk on rent and expense forecasts so lending screens and IC memos reflect both physical and financial risk in one view. (Aegaia risk overlays inside Gnowise.)
Outlook
Expect vacancy to edge higher again in 2025 as completions lease‑up and headwinds from population policy keep demand growth in check. But with ownership affordability still strained, professionally managed rentals remain the durable growth story. The next leg of outperformance will come from teams that pair disciplined site selection with auditable, forward‑looking rent analytics.
Bottom line: Rental Boom 2.0 is real—and survivable—if you trade gut feel for granular evidence. That’s the edge.
Sources (latest as of July 29, 2025)
- CMHC – Fall 2024 Rental Market Report (national): vacancy 2.2%, fixed‑sample 2‑bed rent growth 5.4%, ~23.5% turnover premium. CMHC
- CMHC – Toronto RMR (City of Toronto): 2.3% vacancy (2024). Canada Mortgage and Housing Corporation
- CMHC – Vancouver RMR (Metro): 1.6% vacancy (2024); City of Vancouver memo confirming 1.6% (2024). Canada Mortgage and Housing CorporationCity of Vancouver
- CMHC – Housing Supply Report / News release: H1‑2024: 47% of apartment starts were PBR (record share); six‑CMA starts ~68,639. Canada Mortgage and Housing CorporationCanada Mortgage and Housing Corporation
- CMHC – Annual Report 2024: ~283k rental units insured; ~43% for new construction; ~179k under MLI Select. Canada Mortgage and Housing CorporationCMHC
- Parliamentary Budget Officer – Enhanced GST Rental Rebate (costing): ~$5.8 B foregone GST (2023–24 to 2028–29); construction‑start window through Dec 31, 2030 (completion by Dec 31, 2035). Parliamentary Budget Officer
- Statistics Canada – Building Construction Price Index (Q1‑2025): +3.4% YoY for residential buildings (15‑CMA composite). Statistics Canada
- Rentals.ca National Rent Report (June 2025): national asking rents down year‑over‑year through mid‑2025 (context for listing‑market cooling). Rentals.ca