By Mata Press Service

Canada’s battered rental market may finally be starting to cool, as slower immigration growth and a surge in apartment supply combine to take some pressure off rents, according to a new RBC Economics report.

But for many immigrants, international students and temporary workers, the cost of finding a home remains painfully high.

RBC said rents in Canada “have been cooling for more than a year now,” and argued that the trend still has further to run as population growth slows and more units come onto the market.

The bank said average rent growth across Canada is expected to slow to 3.6 per cent in 2026, with weaker inflows of temporary residents and a growing number of new apartments giving tenants more bargaining power.

The bank said the shift is especially important in Ontario and British Columbia, which have absorbed a large share of newcomers in recent years and have faced some of the country’s most severe rental pressures.

RBC said reduced temporary resident inflows will weigh “particularly heavily” on those two provinces because international students and other temporary residents are far more likely to rent than buy.

The report lands as Ottawa is deliberately pulling back on immigration-driven population growth. Under the federal 2026-2028 Immigration Levels Plan, permanent resident targets are set at 380,000 a year for 2026, 2027 and 2028, while temporary resident arrival targets are set at 385,000 in 2026 and 370,000 in both 2027 and 2028.

The federal government says those lower targets are intended to reduce pressure on housing, health care and infrastructure while supporting labour market and economic needs.

That policy shift is already showing up in the population data. Statistics Canada said the number of non-permanent residents living in Canada fell from a peak of 3,149,131 on Oct. 1, 2024, to 2,676,441 on Jan. 1, 2026, with the decline driven largely by fewer people holding study permits, work permits, or both.

For immigrant communities, the change carries a double edge. Newcomers are often the first to feel the pain of a tight rental market because they are more likely to rent on arrival, often with limited credit history, lower initial earnings, or no family housing network to fall back on.

A slower pace of newcomer growth may ease competition for available units, but it does little to change the fact that rents in major gateway cities remain far out of reach for many working families.

The RBC report says average two-bedroom rents remain around $2,046 in Toronto and $2,363 in Vancouver, or roughly $500 and $800 above the national average.

It said Toronto and Vancouver are now among the slowest-growing big cities in the country, a sharp change from the years when they acted as the main landing points for newcomers. Toronto posted no population growth in 2025, RBC said, while Vancouver grew by just 0.2 per cent. Both also continued to lose residents to smaller and more affordable communities.

RBC said the rental market is being reshaped by more than lower migration alone. It pointed to “elevated inventory,” a stronger rental construction pipeline and softer demand as forces pushing vacancy rates higher.

The bank said vacancy could move above the 3 per cent threshold it sees as marking “a balanced market,” which would further limit rent growth.

Even so, the report makes clear that relief is uneven. RBC said asking rents dropped in 2025 and are projected to decline further in 2026, but average rents paid by tenants are still proving sticky.

That is because many renters remain in place, and landlords continue raising rents on existing tenants even as advertised rents for available units soften. RBC said an outright drop in average rents remains unlikely unless vacancy rates stay significantly above 3 per cent for a sustained period.

That means the crisis is easing but not ending. For immigrants and other newcomers, the emerging story is not one of cheap housing returning to Canada’s biggest cities.

It is a story of a market that may be getting less punishing, even as affordability remains a major barrier to settling, studying and building a life in Canada.

Key findings

• Canada’s rental market is easing: RBC says apartment rent growth is expected to slow to 3.6 per cent in 2026 as demand softens and new supply comes onto the market.
• Slower immigration is a major reason: RBC points to weaker inflows of temporary residents, especially international students and temporary workers, as a key factor reducing rental demand.
• Ottawa is cutting admissions targets: Under the 2026-2028 Immigration Levels Plan, permanent resident targets are set at 380,000 annually, while temporary resident arrival targets are set at 385,000 in 2026 and 370,000 in 2027 and 2028.
• The decline is already visible in the data: Statistics Canada says the number of non-permanent residents in Canada fell from 3.15 million in October 2024 to 2.68 million in January 2026.
• Toronto and Vancouver are seeing the biggest impact: RBC says both cities, long shaped by newcomer demand, are now showing slower population growth and softer rental conditions.
• Rents are still painfully high: Even with conditions cooling, RBC says average two-bedroom rents remain about $2,046 in Toronto and $2,363 in Vancouver.
• This is relief, not a reset: RBC says outright rent declines remain unlikely unless vacancy rates stay well above 3 per cent for a sustained period.
• Immigrants still face the hardest landing: Newcomers may see less competition for rental units, but affordability remains a serious barrier in the country’s biggest settlement cities. This is an inference based on RBC’s rent and migration analysis and Ottawa’s lower immigration targets.