As we step squarely into the fall season, Canadian rental markets show steady declines with prospects down -24% month over month nationally. September typically represents the first full month of declining rental demand with conventional seasonality suggesting peak rental demand in July through August, with September's change in temperature leading to a cooling of rental demand. This year however has been marred by lessened rental demand and saw peak prospects counts back in March, with a rebounding in July that came within 0.7% of the March peak. This bi-modal distribution in annual rental demand is uncharacteristic of conventional demand patterns. September is often more likely to maintain similar prospect counts to March; as opposed to July, which would typically represent the absolute peak in annual rental demand.
Rental demand has declined for 2 consecutive months and is down -31.9% from July 2024, or down 40.3% year over year. September also saw the average number of leads per prospect decline -4.17% month over month which is the largest single-month decline in 36 months. Year-over-year comparisons show a more moderate snapshot of current market conditions with average leads per prospect down -0.18% annually suggesting that those renters who remain on the market are more likely to submit a greater number of leads than the long-term average.
Active property counts continue to decline for the fourth consecutive month and are down -3.0% month-over-month. This decline has accelerated suggesting that while demand continues to lessen into the winter months, units continue to be absorbed by active renters at a rate similar to September of the previous year.
In the following sections, we identify notable changes in rental demand, highlight market-specific trends, and discuss what the coming months may look like for the rental demand in Canada.
Demand scores continued their decline for the second consecutive month in September with active prospects down -24.7% month-over-month across our top 10 markets, active properties are down -3.7%, while demand scores as a whole are down -18.7% monthly. All market segments experienced a drop in active prospects, with primary markets experiencing the largest overall decline in prospects down -25.5%. The top 10 markets conversely experienced more moderate declines for the second month in a row with active prospects down -22.7% which falls below the national average, while properties declined in line with the top 40 average of -3.7% month-over-month. As the temperature continues to cool, so too will rental demand meaning that rental demand is likely to continue its gradual decline as we approach the new year.
Month-Over-Month (M/M)
Month-over-month (M/M) National demand scores were down -18.7% in September 2024 compared with August 2024. Rental market demand is likely in the decline phase of the annual leasing cycle with rental demand declining for 2 consecutive months.
Annual demand comparisons are beginning to show moderation with year-over-year demand scores declining by -9.6% however when looking at the total number of active prospects which are down -41.9% annually the picture is more stark with renter activity across the country declining dramatically between 2023 and 2024 likely in large part due to concerns around affordability. Year-over-year comparisons are likely to continue showing more moderation moving forward as September 2023 represented the start of declining rental demand nationally.
Year-Over-Year (Y/Y)
Year-over-year (Y/Y): Within our top 40 markets demand scores are down -9.6% in September 2024 compared with September 2023. Active prospects are down 41.9% year-over-year, while properties are down -9.9%.
To provide a more detailed analysis of the rental demand in specific markets across Canada, we have segmented our market data into 3 key market segments.
Examining these market segments individually offers a deeper understanding of demand patterns within larger population centers, and allows us to identify trends across markets.
*Overall demand scores are down -19.4% month-over-month, unique prospects are down -25.5%, and properties are down -3.9%.
Primary markets saw one of the largest monthly declines in renter activity of the past 2 years, with renters ending their rental search early en-mass as the weather cools and we enter a new phase in the annual leasing cycle. Primary markets also maintain the substantial multiplier of prospect change relative to active property count changes, with prospects declining 6.6 times faster than active properties. This once again reinforces the perception that while some renters exiting the market do so after successfully finding a new rental home, many more do so without successfully leasing a new unit and instead remaining in place, likely in the hope of greater affordability in the near future.
*Year-over-year demand scores are down -5.3%, prospects are down -42.1%, and properties are down -14.2%.
Annual comparisons continue to show more moderate monthly declines in 2024 with each passing month likely due to 2024's slower overall leasing activity resulting in a lessened decline in overall rental demand as we enter the fall months. Traditionally after the July/ August peak in rental demand, September would see outsized declines in rental activity, whereas 2024 has seen lower overall demand, an earlier peak, and a longer period of declining demand. Most notably within our demand rankings Winnipeg gained 7 positions, while Toronto area markets specifically North York, Mississauga, and Scarborough all declined by -3, -4, and -7 positions respectively.
*Secondary markets demand scores are down -12.7% month-over-month, unique prospects are down -21.3%, and property counts are down -6.3%.
Secondary markets saw a decline in prospect counts well below the national average. Additionally, secondary markets also had the lowest multiplier between prospect and property declines; with prospects declining at 3.4 times the decline of properties suggesting that these markets are maintaining stronger relative renter demand amongst those remaining renters active on the market and likely a greater relative proportion of units being absorbed. This month saw a reshuffling of secondary markets within our demand rankings, with Etobicoke taking the top spot from Surrey. At the same time, Victoria was the only market that saw growth in active prospects up +10.42% month-over-month.
*Overall, year-over-year demand scores are down -26.2% year-over-year, with prospects down by -47.7%, and properties are down by -0.5%.
Secondary markets saw the largest overall decline in prospect counts year-over-year. This outsized decline in overall prospect counts was primarily due to several key markets experiencing dramatic shifts in renter activity including Halifax -73.8%, Kitchener -62.1%, and Etobicoke -60.8%, with the remaining markets seeing an average decline of -33% with declines ranging from -51.7% in Surrey, and -10.2% in Victoria.
*Demand scores in tertiary markets decreased by -19.5% month-over-month, unique prospects are down -22.3%, and available properties are up +0.4%.
Tertiary markets saw growth in active properties for the second month in a row however this increase comes in the face of a substantial decline in active prospects. This month saw two markets buck the seasonal trend of declining prospect counts including East York +4.4%, and Guelph +26.4% month-over-month. Within the top 10 rankings, East York maintained the top spot, while St. Catharines and Guelph both gained 3 positions within the rankings; while Saskatoon and Sudbury both dropped 4 positions.
*Overall, year-over-year demand scores are down by -10%, unique prospects are down by -36.7%, and available properties are down -1.3%.
Tertiary markets continue to show declining year-over-year demand scores; however, this decline is below the national average and suggests that these communities are more insulated from broader national trends. With greater relative affordability tertiary markets are less affected by the circumstances present in larger communities, specifically reduced affordability which drives renters away from signing new leases. This greater affordability however has only marginally reduced the decline experienced with all but one market (Guelph) posting annual declines in overall prospect counts.
Entering October, The Canadian rental market continues to experience a steady decline in rental demand for the second month in a row. Following typical seasonality, September saw the largest monthly drop in prospect counts of the year, which is likely to lead to a continued decline throughout the fall and winter months. While traditional demand trends would see peak rental demand occur in July and August, this year saw demand peak earlier in March followed by a decline and rebounding in July. This shift in peak annual demand is reflective of a changing rental market landscape and is primarily a result of the broader issues facing prospective renters including affordability which has resulted in declining turnover rates, lowered mobility, further limitations on supply, and worsening of affordability. This has culminated in a prolonged slump in rental demand, with demand down -31.9% from the July peak.
The declining number of active prospects coupled with the drop in the average number of leads per prospect further underscores the cooling market conditions experienced across the country. While as a whole the Canadian rental industry has seen a slowing, some markets maintain stronger fundamentals and continue to show growth in prospect counts. Often these markets offer stronger perceived affordability, healthier turnover rates ensuring adequate supply, and more importantly a variety of age, type, and quality of product which offers greater variety for renters across the spectrum of achievable rents.
As a whole, however, more renters continue to remain in place for longer periods. With fewer prospects on the market, those who stay active are more selective and in line with conventional seasonality are gradually submitting fewer leads as we head into the colder months ahead.
As we approach the winter season, it is clear that the Canadian rental market will remain firmly a renters market, with competition among properties only increasing as the number of renters actively seeking a new home continues to decline. Leasing professionals will need to adjust to these shifting conditions, placing greater emphasis on making listings stand out in an environment where prospects are not only fewer, but more discerning. A strategic approach to marketing and leasing will be crucial to ensure that properties continue to attract quality prospects through the slower winter months.
To present this data, Rentsync has determined three key calculations for each area of the report, They are as follows:
Demand Score: Our demand score is rated out of 10 (with 10 being the highest score a city can receive), and is calculated based on unique leads per property, per city, and compared against benchmark data.
For Example East York, ON received a demand score of 4.4 this month, versus 4.2 last month. East York experienced a 0.2-point increase in its demand score
Demand Percentage (% +/-): This is determined according to the year-over-year (YOY) or month-over-month (MOM) increase or decrease in unique leads per property.
For Example The month-over-month demand scores in East York, BC increased by +4% in September 2024 versus August 2024. The year-over-year demand score in Vancouver increased by 0.8 points representing a 22% increase from September 2023.
Position: The position is determined by unique leads per property, with cities that have at least *20 properties or more. The position will vary depending on demand.
For Example This month, East York, ON achieved the top spot in our Top Canadian Cities in Demand rankings, up 3 spots from last month, and up 8 spots from last year's ranking.
*This report provides month-over-month rental listing data for August 2024 versus July 2024 and a year-over-year comparison from August 2024 versus August 2023. It also outlines the month-over-month and year-over-year trends in primary, secondary, and tertiary markets.