A new report from Liv.rent says rising housing supply, combined with slower immigration and fewer temporary residents, is changing market dynamics in several major urban centers.
“Markets that have faced overwhelming pressure for years are now showing the first signs of rebalancing,” the report said. The shift gives tenants more choice and forces landlords to adapt.
Slower immigration reduces pressure
The report points to the sharp slowdown in immigration by 2025 as a major factor that will reduce rental demand.
The number of new entrants fell 19 percent in the first half of the year, with the decline widening from 14 percent in the first quarter to 23 percent in the second, the report said.
Ontario, Alberta and British Columbia saw the biggest declines. Compared to the previous year, Ontario welcomed more than 15,000 fewer newcomers, Alberta saw 8,167 fewer newcomers and BC recorded a decrease of almost 7,000.
BC is also seeing more and more people leaving the country. According to the report, the province recorded an 18 percent increase in emigration, especially in the first quarter of 2025, further reducing housing demand.
More homes are coming online
At the same time, housing supply has continued to rise.
The number of new homes in the country increased by 5.5 percent year-on-year in the first three quarters of 2025, from 169,037 homes to 178,366, the report said.
Growth was led by semi-detached houses, which rose by 15 percent, and apartments, which rose by 8 percent. The number of single-family homes fell by three percent, and terraced houses fell by two percent.
Ontario remained the country’s largest source of new construction, with more than 48,000 starts in the first three quarters. The province also led the way in apartment construction, with 13,205 apartments commissioned in the third quarter alone, the highest quarterly total of any province.
Alberta continued to dominate single-family starts, with 3,279 starts in the first quarter, 4,513 in the second and 4,309 in the third.
The vacancy rate is rising
As new units come onto the market and demand decreases, vacancy rates are rising, especially in purpose-built rental buildings.
According to CMHC, the national vacancy rate for purpose-built rental properties has increased to 3.1 percent in 2025, up from 2.2 percent in 2024 and above the ten-year average.
In Vancouver, the vacancy rate reached 3.7 percent, the highest level since 1988. Rent growth in the city slowed to what the report describes as the lowest level in two decades.
The report notes that purpose-built rental properties have become more expensive than many secondary market options, and says shifting supply and population trends are changing renter behavior.
Tenants can move more freely
Turnover figures are also increasing, a sign that tenants are moving more often and exploring their options.
The report says increased housing supply, combined with economic uncertainty and stagnant wage growth, is giving renters more flexibility in a market that has long favored landlords. Higher emigration levels also contribute to greater availability as units return to the rental pool.
Affordability remains a challenge
Despite these changes, the report warns that affordability pressures remain.
Housing and living costs continue to outpace wage growth, limiting financial flexibility for many renters. The report notes that slower rental growth provides only limited relief, as savings are often offset by higher costs elsewhere amid persistent inflation and broader economic weakness.
While the data suggests the market is cooling, the report suggests the adjustment is uneven and ongoing, with outcomes varying by region and rental type.
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