“Rates of interest are additionally prone to push decrease in 2025, serving to renters make the transition to dwelling possession,” Sondhi mentioned within the report. “What’s extra, falling rates of interest ought to decrease prices for landlords, decreasing the strain to go by these prices to rents.”

Rental provide grows, giving renters extra choices

Forecasts say the rental market may even look extra enticing in 2025 due to new provide opening up.

Final yr marked Canada’s largest achieve of purpose-built rental provide in additional than three a long time, mentioned Canada Mortgage and Housing Corp. in a current report, and Sondhi added “one other flood” is slated to succeed in completion this yr.

The federal housing company mentioned the typical lease for a two-bedroom purpose-built condo grew 5.4% to $1,447 in 2024, in contrast with an 8% enhance in 2023. (CMHC’s report examines the price of precise lease funds, slightly than listings of asking costs, which are sometimes increased.)

In the meantime, Canada’s provide of purpose-built rental flats grew 4.1% year-over-year.

“It’s positively a bit of little bit of a breath of recent air. That mentioned, the rental markets throughout Canada are nonetheless very, very tight,” mentioned CMHC deputy chief economist Tania Bourassa-Ochoa in an interview. She famous there’s a increased emptiness fee for newer, costlier models, whereas that of extra reasonably priced properties is “nonetheless extraordinarily low.” “Once we’re eager about what does that imply for renters? In the end, affordability challenges are positively nonetheless there, and in lots of instances, affordability has even worsened.”

Ladas mentioned most main cities are nonetheless undersupplied relating to rental inventory, that means it is going to be troublesome to maintain any reduction that 2025 brings for tenants.

“The primary half of 2025, no less than, I believe we are able to anticipate … essentially the most reasonably priced markets will proceed to see increased demand and the costliest markets will proceed to see decrease demand, and rents are going to maintain coming down,” he mentioned. “However I believe that these rental costs coming down ought to be checked out extra as a short lived factor.” He famous that new high-rises take years to construct, and many who opened up final yr have been the results of tasks that started when borrowing prices plummeted throughout the pandemic.