Recent data suggests Canada’s rental market is entering a period of adjustment as new housing supply comes online and conditions begin to normalize following several years of elevated rent growth. In select markets, vacancy rates have edged modestly higher and rent increases have moderated, reflecting higher completions and improved availability.
While demand for rental housing continues to be structurally supported by population growth and long-term demographic trends, these shifts point to a more balanced rental environment heading into 2026. This normalization marks a transition away from the exceptionally tight conditions experienced in recent years.
For investors, current market dynamics reinforce the importance of disciplined underwriting and conservative leverage assumptions. Moderating rental growth may place pressure on near-term cash flows, particularly for projects with higher leverage or optimistic rent projections. In contrast, experienced operators with strong balance sheets and realistic assumptions remain better positioned to navigate this phase of the cycle.
From a lending perspective, the environment continues to favour asset-backed strategies that emphasize prudent loan-to-value ratios, strong collateral security, and clearly defined exit strategies. These principles remain central to Hawkwood’s approach as it focuses on capital preservation and risk management across varying market conditions.