As interest rates decline and the supply of homes for sale grows, affordability is improving, shifting many residential real estate markets across the country in favour of buyers. This would seem to open the door for renters considering the move to home ownership. However, behaviour is more nuanced and many are approaching the opportunity strategically.
According to a recent Royal LePage® survey, conducted by Burson, 28 per cent of Canadians who currently rent say that, before signing or renewing their current lease, they considered buying a property rather than renting. When asked what factors influenced their decision to rent instead, 40 per cent of respondents said they are choosing to wait for property prices to decline; 29 per cent are choosing to wait for interest rates to decrease further; and 28 per cent say they are working towards buying a property, and continuing to rent allows them to save for a sufficient down payment. Respondents could select more than one answer.
More than half of all renters surveyed (54%) say they plan to buy a property in the future; 16 per cent say they plan to do so within the next two years, and 21 per cent plan to buy in the next two to five years.
“We continue to see that many tenants are motivated to get a foot on the property ladder,” said Phil Soper, president and CEO, Royal LePage. “In Canada’s least affordable cities, entry-level opportunities have improved significantly, with home prices off last year’s peaks, incomes up and borrowing costs trending lower. Still, many renters – including the 40 per cent who told us they’re holding out for further price declines – are choosing to wait. History suggests they may be disappointed. Over the past 75 years, Canadian home values have risen approximately five per cent annually, running consistently ahead of inflation. The window of opportunity may be narrower than it appears, and strategic buyers are beginning to move.”
Nationally, nearly one third of renters (31%) say they do not plan to purchase a home. Of those respondents, 53 per cent say they don’t believe their income will allow them to buy a property in the neighbourhood they want to live in. Forty per cent say that renting remains more affordable, and 40 per cent say they don’t want to take on the responsibilities of maintaining a property. Respondents could select more than one answer.
Rents on the downslide, but affordability remains a long-term battle
After surging in response to interest rate hikes and rising mortgage costs in 2022, rental prices in many cities across Canada have been on the decline for the last several months, offering those seeking rental accommodations more favourable market conditions.
According to the latest National Rent Report by Rentals.ca and Urbanation Inc., the average national price of a one-bedroom rental unit in Canada decreased 3.6 per cent year over year to $1,857 in May 2025. Meanwhile, the average price of a two-bedroom unit decreased 4.6 per cent year over year to $2,225.
“Softening activity in the rental market has been driven by a combination of factors. On one hand, the completion of purpose-built rental projects and condominiums in major cities like Toronto and Vancouver has introduced a surge of new supply to both the resale and rental markets. On the other, demand has tapered slightly as international student permits have been capped and lower interest rates have encouraged some renters to make the leap into home ownership,” said Soper. “As a result, tenants may now be in a better position to secure rentals with more space, upgraded amenities, or more desirable locations, often at more competitive prices.
“Rental markets tend to respond more slowly than resale housing to changes in the economy. Home prices have softened in many regions through the first half of the year, and we’re now seeing that relief begin to flow through to the rental sector. For the first time in years, some tenants are seeing more choice and negotiating power,” added Soper. “Yet, for those aspiring to own, this may be the moment to take a harder look at what’s possible. With prices down in many markets, rates easing, and wages growing faster than the cost of housing, the path to ownership – long a distant beacon for many – may now be coming into clearer focus.”
Despite the improvements, affordability continues to be a challenge for renters. While rents have eased for eight consecutive months, they remain well above historical norms. Nationally, rents are 5.7 per cent higher than they were two years ago and 12.6 per cent higher than three years ago, according to the report. Over the past five years, average asking rents in Canada have risen by an average of 4.1 per cent annually, outpacing wage growth.
Thirty-seven per cent of renters in Canada say they are spending between 31 and 50 per cent of their net income on monthly rent costs, while another 37 per cent are spending 30 per cent or less. Fifteen per cent of respondents are spending more than 50 per cent of their income on rent.
Challenges with affordability are also forcing renters to make hard choices. When asked if they’ve made any sacrifices in order to afford their rent, 40 per cent of tenants said they have reduced spending on groceries and food; 30 per cent said they have reduced contributions to savings or retirement; 21 per cent said they are accumulating credit card debt; and 20 per cent said they are taking on a second job or side hustle. Respondents could select more than one answer.
“Even with several months of decreases, rents are still significantly higher than they were just a few years ago,” said Soper. “Meaningful policy action is needed to restore long-term affordability.”
Ensuring rental housing is affordable for future Canadians
Housing policy remains top of mind for Canadians and the government. In recent years, the debate over how to solve Canada’s housing crisis has been front and centre during election campaigns at every level of government, across cities, towns and provinces from coast to coast. The newly-elected federal government has committed to materially improving housing affordability by increasing the rate of construction, cutting taxes, simplifying approval processes for developers of purpose-built rental housing and offering financial incentives, such as the GST break for first-time buyers of new construction homes.
“There’s no single fix for Canada’s housing challenges,” said Soper. “Restoring affordability – without undermining the equity that millions of Canadians depend on – will take more than just building homes. It demands coordinated action from all levels of government and the private sector. Yes, we need to dramatically increase housing supply across the spectrum, from purpose-built rentals to entry-level ownership. But, cutting red tape, modernizing zoning and strengthening tenant protections will be critical to ensuring fair and lasting access for all.”
When asked which policies would be most effective in improving rental affordability, 56 per cent of renters said they support the building of more affordable housing units; 47 per cent selected increasing tenant protections against eviction and unfair rent increases; 42 per cent said they’d like stricter rent control measures implemented. Respondents could select more than one answer.
Royal LePage 2025 Canadian Renters Report – Data Chart:
rlp.ca/2025-Canadian-Renters-Report-Chart
REGIONAL SUMMARIES
ONTARIO
In Ontario, 28 per cent of renters say that before signing or renewing their current lease they considered buying a property rather than renting. When asked what factors influenced their decision to rent instead, 43 per cent of respondents said they are choosing to wait for property prices to decline; 34 per cent said they are choosing to wait until interest rates decrease further; and 34 per cent said they couldn’t qualify for a mortgage or financing. Respondents could select more than one answer.
Looking ahead, 55 per cent of renters in Ontario say they plan to purchase a property in the future; 15 per cent plan to do so within the next two years and 21 per cent plan to buy in the next two to five years. Of those not planning to purchase a property (31%), 50 per cent say their income will not allow them to buy a property in the neighbourhood they want to live in; 43 per cent say that renting remains more affordable, and 43 per cent say they don’t want to take on the responsibilities of maintaining a property. Respondents could select more than one answer.
“Rental prices in Toronto have declined as demand continues to soften. A surge in supply, driven by the completion of thousands of new condo units, has added to inventory in recent months. At the same time, reductions in international student visas and the issuance of work permits have hampered activity, leading to fewer multiple-offer scenarios on rental units – something that had become typical for in-demand properties, especially during the peak of the pandemic rental surge in the second half of 2022 and 2023,” said Amrit Walia, sales representative, Royal LePage Signature Realty, Toronto. “That said, activity has picked up in certain pockets of the city. With many downtown companies now requiring employees to return to the office nearly full-time, demand for rentals in the Financial District and surrounding neighbourhoods has increased.”
Walia added that one-bedroom units with dens – particularly those near restaurants, green spaces and the vibrancy of downtown life – remain highly sought after.
According to the latest National Rent Report by Rentals.ca and Urbanation Inc., the average price of a one-bedroom rental unit in Toronto decreased 7.1 per cent year over year to $2,302 in May 2025, a modest 0.7 per cent dip over the prior month. The average price of a two-bedroom rental unit in the city decreased 10.7 per cent year over year to $2,933, but increased modestly by 0.3 per cent month over month.
In Ottawa, the average price of a one-bedroom rental unit was flat, remaining at $1,994 year over year in May 2025. On a monthly basis, rental prices dipped 0.8 per cent. The average price of a two-bedroom rental unit in the city increased 2.4 per cent year over year to $2,559, but decreased modestly by 0.6 per cent month over month.
Thirty-eight per cent of renters in Ontario say they are spending between 31 and 50 per cent of their net income on monthly rent costs, while 35 per cent are spending 30 per cent or less. Fifteen per cent of respondents are spending more than 50 per cent of their income on rent. Thirty-nine per cent of tenants in the province say they have reduced spending on groceries and food in order to afford their rent; 32 per cent have reduced contributions to savings or retirement; and 22 per cent have accumulated credit card debt. Respondents could select more than one answer.
“With more rental supply expected to come online in the coming months, we anticipate modest price growth in the short-term, presenting a favourable window for renters looking to upgrade their living space. However, though the competitiveness of the rental market has eased, prospective renters shouldn’t let their guard down. Even in a slower market, landlords remain selective, prioritizing reliable tenants and consistent income,” said Walia. “Softer market conditions are unlikely to last. With builders scaling back construction activity, the influx of new supply is expected to taper off significantly in 2027 and 2028, setting the stage for renewed demand and upward pressure on prices once again.”
Royal LePage 2025 Canadian Renters Report – Data Chart:
rlp.ca/2025-Canadian-Renters-Report-Chart