Canadian rent prices hit 20-month low as visa restrictions reduce international student numbers

Rental listings from landlords showed a 4.8% decline year-on-year to an average of CAD2,088 (US$1,458.50) last month, according to Rentals.ca and Urbanation Inc. This marks the lowest rental figure since July 2023 and represents the steepest drop since April 2021, during the Covid-19 pandemic.

Zumper, another rental platform, echoed these findings, reporting a 2.4% annual decrease in rents for one-bedroom apartments, averaging CAD1,850 in February.

Buildings are lining the skyline by Lake Ontario in Toronto, Ontario, Canada, on July 13, 2024. Photo by AFP

Toronto and Vancouver, traditionally Canada's most expensive rental markets, continue to lead in rental costs. However, both cities have seen rents decrease due to a substantial influx of newly built condominiums, The Globe and Mail reported.

Rentals.ca reported studio apartment rents dropped by 5% in Vancouver and 6% in Toronto, with similar decreases recorded in larger units.

These decreasing rental prices are creating challenges for preconstruction buyers who are set to receive nearly 20,000 new condo units expected to be completed in 2025. These buyers are now facing high closing costs and rental rates that fall short of covering their mortgage payments.

The 2025 Housing Market Outlook of the Canada Mortgage and Housing Corporation suggested that the federal government's multi-year strategy of offering financial incentives to boost the development of purpose-built rental housing has led to an oversupply of rentals in certain markets, surpassing demand for the first time in decades.

It said that in 2024, the national rental supply saw its largest increase in 30 years, growing by 4.1%, while the national vacancy rate reached 2.2%, with indications pointing to further increases in the future.

Another contributing factor is economic uncertainty stemming from trade disputes with U.S. President Donald Trump.

For this reason, the Canada Mortgage and Housing Corporation estimates years of growing vacancy rates in Canada’s biggest cities, which might prevent rents from increasing.

Some analysts say that the decline of international students, which is triggered by the government’s visa restrictions, have contributed to declining rents.

In January last year the government capped the number of international student visas it issues, a move which is estimated to bring down the number of foreign students arriving in Canada by 45%.

Although it is difficult to determine the precise impact of those policy changes on the slowdown of asking rent, the impact is likely substantial, said Mike Moffatt, a senior director of policy at the Smart Prosperity Institute.

"Every summer you were adding tens of thousands of extra renters to some communities who weren’t there the year before, coupled with supply that wasn’t increasing much," he said.

"Rents in college and university towns had gotten completely out of whack and that was the rationale for the federal government to make these changes."

Last year, an estimated 280,000 study permits were issued, marking the lowest number of approvals in a non-pandemic year since 2019, the year before Covid-19 outbreaks, according to a report by ApplyBoard, the world's largest online platform for international student recruitment.

Since late 2023, the government has issued a series of stricter policies on international students, aimed at controlling the impact of immigration flows to Canada.

In September last year, rents in Canada were increasing at their slowest pace in nearly three years, largely the result of foreign student enrollments dropping by roughly a half from their record highs, with the impact felt most in B.C. and Ontario, said Shaun Hildebrand, president of Urbanation, as reported by Global News.