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Canadian rental prices experienced a modest decline in June 2025, marking the ninth consecutive month of year-over-year decreases. The average asking rent fell to $2,125 per month, a slight 0.2% drop from May. This slowdown in the rate of decline suggests that the downward pressure on rents is easing. However, rents remain 2.7% lower than the previous year, indicating a continued, albeit slowing, trend of affordability improvement.

Despite the recent declines, rental prices are still significantly higher than five years ago. The average rent has increased by 22.8% over the past five years, more than doubling the Bank of Canada's target inflation rate. This persistent rise in rents, even amid current declines, poses challenges for households, as wages have not kept pace with rental costs, potentially leading to reduced disposable income and slower economic growth.

The future trajectory of rental prices remains uncertain. While the current data indicates a slowdown in the rate of decline, it is unclear whether rents are approaching a bottom or if a second-wave correction is imminent. The real test for the rental market will come towards the end of summer and early fall, which is typically the seasonal peak for rental activity. This period will provide clearer insights into the market's direction and the sustainability of recent affordability improvements.

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