Higher building costs are putting new rental projects at risk
TORONTO — Tariffs are emerging as a new source of pressure on Canada’s rental market, according to a new analysis from Rentals.ca and Urbanation. Average asking rents have already fallen 4.8 per cent over the past year, driven by a wave of new supply and a slowing population, but the impact of tariffs has yet to fully take hold, with the most significant effects on rents still ahead due to the lag between tariff implementation and its downstream effects on jobs and construction. Early signs of impact are already visible on the demand side, with rents in the 10 most tariff-exposed markets falling nearly four times faster than in the 10 least-exposed markets since January 2025, and Oshawa, a market highly exposed to the auto sector, posting a double-digit annual rent decline.
“Tariffs will shape the rental market before they show up in the rent numbers, as the trade war is only beginning to work its way through employment and construction costs,” said Shaun Hildebrand, president at Urbanation. “On the demand side, economic uncertainty will keep renters in place and delay new household formation. On the supply side, rental now carries most of the housing pipeline, which means cost pressure falls on the main product type being built. Projects shelved this year become missing completions at the end of the decade, right when population growth is expected to return.”
On the supply side, tariff-related inflation in construction materials is expected to have an outsized impact on Toronto and Vancouver, where high-rise construction is the dominant built form and condo starts have already collapsed, as Toronto saw zero new condo launches in the first half of 2026, a first on record. Statistics Canada’s Building Construction Price Index shows structural steel framing costs up 7.2 per cent since Q1 2025, attributed directly to retaliatory tariffs, while materials produced domestically, such as wood and composites, have seen little to no impact. Purpose-built rental housing, which now represents more than 60 per cent of all new housing construction nationally, is increasingly the primary product type absorbing this cost inflation, and rising costs could push already-challenged projects to be shelved or cancelled. Starts deferred in 2026 could become missing completions in 2030-31, just as population growth is expected to recover, setting up a potential collision between a supply trough and a demand rebound.
On the demand side, the impact of tariffs is felt primarily through the labour market, as exposed industries implement hiring freezes, reduced hours or job cuts, creating income uncertainty that delays household formation and softens net absorption of new units. Manufacturing payroll employment fell by 40,600 nationally in 2025, with Ontario absorbing the steepest losses, down 27,200 jobs, including an 18.4 per cent decline in primary metals manufacturing in a single year. Beyond direct job losses, broader uncertainty is prompting renters to remain with roommates or family longer and existing tenants to renew leases rather than move or upgrade.
Exposure to tariffs varies significantly by local economy: Windsor, Hamilton, Kitchener-Cambridge-Waterloo and Brantford are exposed through autos and steel, Saguenay and Trois-Rivières through aluminum, and Prince George, Nanaimo and Kamloops through lumber, while Calgary ranks highest of all cities tracked in the National Rent Report on the Canadian Chamber of Commerce’s tariff exposure index, driven by its ties to energy exports. Exposure does not map directly to outcomes, however: Oshawa’s asking rents are down 10.8 per cent over the past year, while Windsor, similarly exposed through the auto sector, is down just 2.4 per cent, roughly half the national decline, due to a comparatively thin local rental supply.
To read the entire analysis, visit the article on the Rentals.ca blog. For more information or to schedule a media interview, please contact [email protected].
Media contacts:
Giacomo Ladas — [email protected]
Shaun Hildebrand — [email protected]
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