In markets with low turnover and strict rent regulations, rents often rise sharply when units become available. Landlords adjust rents to match current market rates, which are typically much higher than the regulated rents of the previous leases. These increases may also help offset increases in operating costs and cover rising turnover-related costs such as renovations and repairs.

We noticed this dynamic by analyzing4 rent-controlled markets — Ottawa and Toronto — comparing buildings completed after November 2018 (exempt from rent control) with similar buildings constructed between 2011 and 2017 (subject to rent control). In both cities, when units in rent-controlled buildings turned over, rents were typically raised to match those in newer, exempt buildings.

Rents in older buildings are catching up with those of newer properties5

With strong growth in average turnover rent, the rent gap between older and newer buildings has narrowed across major CMAs. When older units became available, they were priced closer to newly built supply (completed within the past 5 years). In Vancouver, the gap was smallest in 2024 — just 9% for 2-bedroom purpose-built rental apartments. In expensive, tight markets, affordability has deteriorated to the point where many new and moving renters are settling for modest savings by choosing older stock. 

Higher turnover rents in several major rental markets have decreased tenant mobility, leading to longer average tenancy periods and resulting in more substantial rent increases when tenants do move. In 2024, the rent difference between vacant and occupied 2-bedroom units reached 44% in Toronto, the highest among major cities. Edmonton, with higher turnover and no rent control, had the smallest gap (5%).

Signs point to increasing turnover

In October 2024, turnover remained at the lowest rate recorded by our Rental Market Survey since data collection began in 2016. However, since then, stakeholders in several major cities have indicated an uptick in turnover because of higher vacancies and incentives encouraging tenants to move.

This is supported by an increase in the availability rate6 for newer purpose-built rentals in Toronto7. This rate has recently grown faster than the vacancy rate since the Fall, which indicates a rise in tenant turnover.

Vacancy rates set to rise further

Over the rest of 2025, the rental market is also expected to be influenced by slower population growth and changing employment conditions. As demand struggles to keep pace with new supply, the market will remain in a period of adjustment. This is particularly true in Ontario due to lowered international migration targets, especially in areas near post-secondary institutions.

Newer purpose-built rental properties will face more pressure from longer lease-up phases and increased vacancy rates. While the market may have abundant supply in the short-term, there is still a need to maintain momentum in new rental supply to meet the needs of projected future population growth and to achieve better affordability outcomes for existing households.

Rent burden still growing in major Canadian markets

Stakeholders have noted increasing financial pressures on renters. As affordability pressures persist, more tenants are expected to turn to shared living arrangements, further boosting demand for 3+ bedroom apartments. This shift may make it harder for smaller units to attract tenants as households prioritize space-sharing to save money.

To monitor monthly rental affordability, we calculated 2 different rent-to-income ratios8:

Rent-to-income ratio using average market rents:
This uses average rents for 2-bedroom units from the Labour Force Survey. These rents reflect broader conditions in the rental market.
Rent-to-income ratio using advertised rents:
This uses average advertised rents for 2-bedroom units from online rental listings. These rents represent the actual prices faced by new renters entering the market.

The rent-to-income ratios based on Labour Force Survey rents (see Figure 5) are the highest in Vancouver, followed by Toronto. The ratios in other rental markets are within a similar range. Since the COVID-19 pandemic in 2020, rent-to-income ratios have steadily increased across markets. This shows that rental affordability has been getting worse over time.