A Decade of Rental Yield Trends in Canada

Over the last ten years, Canada's rental yields have told a story of resilience amid change. Back in 2015, the national average gross rental yield started at 4.5%. It has gradually increased to 5.55% in 2025, reflecting steady growth driven by population increases from immigration and ongoing demand for rental units.

But yields aren't uniform across the country. In Toronto, for instance, gross yields have averaged around 3.5% to 4% over the decade, often squeezed by high property prices. Vancouver follows a similar pattern, with yields dipping to as low as 2.8% in peak years but rebounding to about 3.2% in 2025. On the brighter side, cities like Calgary and Edmonton have seen stronger yields, averaging 5% to 6%, thanks to more affordable entry points and robust energy-sector economies. Montreal stands out with yields around 4.5%, benefiting from cultural appeal and steady tenant demand.

These trends highlight a key truth: rental investing isn't just about national averages. It's about finding pockets of opportunity where local factors align in your favor. For more details on these city-specific yields, check out the latest report from the Canada Mortgage and Housing Corporation (CMHC), which provides comprehensive breakdowns.

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Mortgage Rate Fluctuations

Now, let's pair those yields with mortgage rates, because financing costs can make or break your returns. Historical data shows that 5-year fixed mortgage rates in Canada started the decade at 3.2% in 2015. Rates trended downward through the late 2010s, reaching a low of 2.1% in 2021, which made borrowing feel like a golden opportunity for expanding portfolios.

Things shifted in the mid-2020s. Rates began climbing again, hitting 3.5% in 2024 and reaching 5.6% in 2025, influenced by Bank of Canada policies and broader economic pressures. For a precise look, the Bank of Canada tracks these rates historically. Imagine locking in a mortgage at 2.1% back in 2021; your monthly payments felt like a bargain. Today, at 5.6%, those same payments eat into profits more noticeably.

When we compare this to rental yields, the gap has varied. In 2015, with yields at 4.5% and rates at 3.2%, landlords enjoyed a positive spread. By 2025, yields at 5.55% against 5.6% rates mean much slimmer margins, especially after expenses.

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Historical Data Table

To make the comparison clearer, here's a table summarizing the key trends based on national averages:

Sources: Super Brokers, WOWA

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Net Yields

Gross yields paint a rosy picture, but net yields tell the full story once you account for operating expenses like maintenance, property taxes, and insurance. As shown in the table, we've estimated nets by subtracting about 2% from gross yields to reflect typical costs, resulting in figures like 2.5% in 2015 rising to 3.55% in 2025. In reality, these costs vary, often shaving 20% to 30% off gross yields depending on the property.

Regional variations play a big role here. Alberta's lower taxes and vacancy rates (around 3% in Calgary) help preserve higher nets, while Ontario's rent control policies cap increases, potentially limiting upside in Toronto. Vacancy rates have trended downward overall, from 3.3% in 2015 to about 1.5% in 2025 in major markets, per CMHC data. That's good news for consistent income, but it also means fiercer competition for quality tenants.

Policies matter too. British Columbia's stricter rent controls have kept yields stable but modest, while Quebec's balanced approach supports steady growth. If you're eyeing a property, consider these elements; they're like the soil quality in that garden analogy, determining how well your investment thrives. For deeper insights into vacancy and policy impacts, the CMHC Rental Market Report is an excellent resource.

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What’s the Real ROI for Landlords in 2025?

So, what's the takeaway? Over the decade, rental yields have generally risen alongside fluctuating mortgage rates, but the recent rate increases since 2024 have compressed ROI. If you're a landlord with properties bought at lower rates like those in 2021, you're likely still ahead with positive net spreads. New entrants, however, might find the math tighter, with 2025's 5.6% rates nearly matching the 5.55% gross yields.

That said, there's optimism ahead. With immigration boosting demand and new housing completions lagging, yields could strengthen. Focus on cities with favorable trends, like those in the Prairies, and always run the numbers: calculate your potential net yield by subtracting expenses from rental income, then compare it to your mortgage rate.

Investing in rentals is more than data, it's about building stability for yourself and your tenants. If you're ready to explore opportunities, our team at Coldwell Banker Horizon Realty can help you navigate these trends with personalized advice. Contact us today to discuss how these insights apply to your goals.