Rents are expected to continue falling over the next few months due to labour market weakness, slowing wage growth and reduced immigration. (Credit: Getty Images) <\/p>\n
Rents are declining<\/a> and will likely continue to do so in many cities across Canada as rising trade tensions take their toll on a weakening labour market, according to a new Royal Bank of Canada<\/a> report.<\/p>\n RBC said rents have fallen in half of Canada\u2019s major cities, including Vancouver and Toronto, where they are estimated to have dropped $270 and $160, respectively, in the first quarter from a year ago, based on the average asking rent for a two-bedroom apartment.<\/p>\n Rents are also down in Calgary, Halifax and Kelowna, B.C., underscoring a big shift from the period following the pandemic when rents were rising by double digits in some parts of the country.<\/p>\n \u201cThough we anticipated continued moderation in rents, escalating trade tensions<\/a> with the United States may be intensifying the trend,\u201d Rachel Battaglia, an economist at RBC, said. \u201cWe\u2019re now seeing clearer signs of labour market weakness in trade-exposed industries, which may be contributing to the sustained downward pressure on rents.\u201d<\/p>\n Canada\u2019s labour market<\/a> has been showing signs of sustained weakness, with the unemployment rate at 6.9 per cent in July compared with 6.6 per cent at the start of the year.<\/p>\n In Ontario, Canada\u2019s manufacturing heartland, the unemployment rate<\/a> is 7.9 per cent, with the province\u2019s economy recording job losses of 2.6 per cent in the manufacturing sector and 1.9 per cent in the warehousing and transportation sectors in July from the same time last year.<\/p>\n \u201cWe have Ontario really bearing the brunt of this. Ontario is the manufacturing heartland, I\u2019ll say, of Canada. And so we\u2019ve had significant labour market weakening, especially in southwestern Ontario,\u201d Battaglia said. \u201cThat\u2019s also where we\u2019ve seen a lot of the rental softening happening.\u201d<\/p>\n Her report pointed out that cities in Canada\u2019s trade hub area, including Hamilton, Peterborough, Oshawa and Windsor \u2014 all in Ontario \u2014 all posted declining or flat rents in the first quarter of 2025 compared with last year.<\/p>\n The unemployment rate has also been increasing. For example, it rose in the Windsor-Sarnia area to 9.5 per cent in July from 7.9 per cent a year ago, Statistics Canada said.<\/p>\n Some households, whose employment has been hurt by United States President Donald Trump\u2019s<\/a> trade winds, could be abandoning their rental accommodation and moving back in with parents or sharing with other people to save on costs, Battaglia said.<\/p>\n \u201cWith the intensification of the Canada-U.S. trade dispute, tariff uncertainty appears to have rattled an already fragile labour market, which could be adding further downward pressure to rental costs,\u201d she said.<\/p>\n Story Continues <\/p>\n But Canada\u2019s trade troubles are only part of the picture on rents, which were already on the way down before Trump rolled out his tariff agenda.<\/p>\n