As we enter 2025, Canada’s multifamily market remains tight, though the supply-demand imbalance is starting to ease, and rent growth is slowing down. According to Yardi’s latest report, the economic outlook is mixed, with lower interest rates fostering optimism for housing market activity and consumer spending. However, uncertainties loom, including the impact of the second Donald Trump administration in the U.S. and political changes in Canada following Prime Minister Justin Trudeau’s resignation, which will trigger a national election. New leadership is expected to implement policies that may reduce taxes, spending, and immigration quotas.

Economic growth and employment

Growth in 2025 is projected to be modest, with Moody’s Analytics forecasting a GDP increase of 1.0 per cent down from 1.3 per cent in 2024. Despite the creation of 414,000 jobs in 2024, the workforce grew by nearly double that amount, pushing the unemployment rate up to 6.7 per cent. Canadian households have accumulated savings that could boost growth, aided by a temporary holiday in the goods and services tax and lower interest payments.

Yardi notes that the possibility of tariffs poses a risk to the economy. With three-quarters of Canada’s exports going to the U.S., any tariffs on Canadian goods could increase inflation and force Canadian lawmakers to consider reciprocal measures. The stakes are high, as two million Canadian jobs are tied to trade with the U.S., particularly in sectors like automobile manufacturing.

Meanwhile, inflation has moderated to 1.9 per cent, below the Bank of Canada’s 2.0 per cent target, leading to a reduction in the benchmark rate to 3.25 per cent. Lower interest rates are expected to reduce interest payments for Canadians to less than 10 per cent of income in 2025, down from 11 per cent in 2024, freeing up cash for consumer spending.

Multifamily rent trends

Multifamily rents in Canada have moderated but remain high by historical standards. The average national in-place rent increased to $1,565 in Q4 2024, with a year-over-year rise of $85. Rent growth has slowed, with in-place rent growth falling to 5.8 per cent in Q4 2024. Gains are led by markets in Alberta and Saskatchewan, with Calgary, Edmonton, and Saskatoon showing the highest rent increases.

Toronto has proposed incentives to stimulate the construction of 20,000 new purpose-built rental units, including 4,000 for low-income renters. These incentives include deferring development charges and reducing property taxes. Metro Vancouver is considering waiving utility connection fees for affordable rental units. While rental housing construction is increasing, it remains small relative to demand, with apartment completions up 28.2 per cent year-over-year to 63,000 units in 2024.

Immigration and population growth

Immigration growth is set to slow, with the target for permanent residents reduced to 390,000 in 2025 from 500,000 in 2024. Admissions of temporary workers and students will also decrease, potentially impacting the rental market.

For a detailed overview of the multifamily market in 2025, download the report at: Yardi.com.