A 4.2% National Rent Drop Masks Different Stories by Region and Unit Type

Asking rents in Canada have now fallen for two straight years. The latest Rentals.ca and Urbanation National Rent Report puts the national average asking rent 4.2% lower than a year ago. That is a sharp turn from the double-digit increases renters faced in 2022 and 2023. A national average blends very different markets together, though. If you own a rental or are thinking about buying one, the number that matters is the one for your type of unit in your part of the country.

Asking rent measures new listings

Asking rent is the price on new listings. It is not what existing tenants pay. When asking rents fall, the change shows up first for people signing new leases. Tenants who stay put are mostly unaffected.

In Manitoba, that gap is built into the rules. The Residential Tenancies Branch sets an annual guideline that limits how much landlords can raise rent for sitting tenants. Other provinces work the same way. British Columbia's allowable increase for 2026 is 2.3%. So a long-term tenant in Winnipeg can still get a guideline increase in a year when new listings across the country are getting cheaper. For an owner, this means falling asking rents mostly matter at turnover, when a unit goes back on the market.

There is one important Manitoba exception. Newer buildings, generally those built within the last 20 years, are exempt from the guideline. Their rents are limited by competition instead. If you own one of those units, you feel market softness more directly.

Why condos are taking the hit

Condo rentals are under the most pressure nationally, and the reason is easy to see. Many condos are owned by individual investors who bought with a mortgage. When rent no longer covers the mortgage, property taxes and condo fees, the owner has what is called negative cash flow. That means paying money out of pocket every month to keep the unit.

Owners in that position often cut the rent to avoid a vacant month. With many similar units listed in the same towers, those cuts can turn into price competition. Purpose-built rental buildings, which are apartment buildings designed and run as rentals by one owner, tend to hold steadier. A single owner managing hundreds of units is not under the same monthly pressure as someone carrying one condo.

Softer rents also change how tenants choose. When newer, amenity-rich buildings cost only a little more than older units, many tenants move up. That "flight to quality" can leave older private rentals with longer vacancies even in a market that looks fairly balanced overall.

Regional differences

The national decline leans heavily on corrections in Toronto and Vancouver, where condo supply grew quickly. Even there, rental inventory is starting to stabilize as fewer new buildings are completed. Winnipeg has historically moved less in both directions. Lower entry prices and steady immigration have kept it from the steep run-ups of the coastal markets, and from the deep pullbacks that follow them.

Statistics Canada data points to a broader shift that applies everywhere. With higher borrowing costs, investors have moved away from counting on price appreciation and toward monthly cash flow. Before you look at a property, ask whether the rent covers the costs today. A good guess about where prices might go is not enough.

What this means for investors with equity

For readers with significant home equity, this market looks different than it did three years ago. Competition for investment properties is lower. Building permits also fell in 2024 and 2025, which could mean less new supply in the years ahead and firmer rents again, possibly around 2028. That is a possibility, not a certainty. If the Bank of Canada keeps lowering rates, more renters may decide to buy, and that would change demand in ways that are hard to predict.

Tax treatment also matters. Mortgage interest, property taxes and maintenance on a rental are generally deductible against rental income. In some cases, a rental loss can reduce other taxable income. That can ease the cost of a thin year, but it does not make a property that loses money every month a good investment. The deduction gives back part of the loss and leaves you paying the rest.

Before you decide anything, look at the specific unit, the guideline that applies to it, and the rent a new tenant would actually pay.