Canada Faces Deepening Rental Housing Gap Amid Surging Demand

Canada’s rental housing crisis isn’t new, but a recent report from National Bank of Canada Financial Markets sheds light on just how deep the supply-demand gap has grown.

Using 2021 census data and tracking population growth since then—largely driven by immigration—the report found that even back in 2021, Canada was already facing a shortage of rental units. At that time, the deficit was relatively minor, just a few thousand units short. But over the next three years, as immigration surged and housing construction lagged, the shortfall ballooned.

By the end of 2024, Canada had ramped up construction significantly, building more than 450,000 new rental units annually. However, that still wasn't enough. Demand had climbed past 900,000 units, leaving a gap of over 450,000 units.

In response, the federal government scaled back immigration targets to help curb the pressure on housing and rising rents, particularly in urban centers. The strategy seems to be having an effect. National Bank projects that pent-up rental demand will shrink by about 150,000 units in 2025.

Still, the road to balance won't be quick. The report emphasizes that while construction is on the rise, the backlog of unmet rental demand will take years to fully address. Until then, Canadians can expect continued strain in the rental market—even as efforts to close the gap remain in motion.