Montreal Housing Paradox: New Units Sit Empty Amid Rental Shortage

Why Montreal New Build Vacancy Rates Are Soaring

The 8.4 per cent vacancy rate in recent constructions starkly contrasts with older inventory. According to Canada Mortgage and Housing Corp. data, buildings constructed before 1940 recorded a tight 2.1 per cent vacancy rate in 2025. Jean-Philippe Meloche, a Université de Montréal professor of urban economy, notes that a 2.9 per cent vacancy rate represents a standard balance in real estate. However, the high volume of empty units in modern complexes points to a major mismatch between what developers build and what everyday tenants can afford.

Affordability Crisis Hits New Construction

Quebec provincial and municipal leaders have pushed policies to promote building new residences as a solution to the housing crisis. Benoit Rullier, a spokesperson for the Regroupement des comités logement et associations de locataires du Québec (RCLALQ), states that developers focus on units priced far beyond the average tenant’s budget.

This dynamic mirrors struggles in Toronto and Vancouver, where builders lean heavily on single-occupancy condominiums. According to Mitch Strohminger, historical architecture favoured larger triplexes and mid-rise buildings suited for families. Today, developers build smaller units just to make project financing work.

Federal Incentives and Inexperienced Developers

Nicolas Galardo, a partner at Groupe Montclair, traces the root of the problem to federal and Canada Mortgage and Housing Corp. incentives. These programs financed high-density projects packed with small apartments that failed to target demographics needing space most. Galardo argues that incentives should have prioritized family, affordable, and social housing. Furthermore, he points out that loose financing standards meant “any promoter and their uncle could get into the (rental) business.”

Owners of these new buildings now resort to promotional tactics to attract tenants. Galardo highlights pervasive offers of three months of free rent, plus free internet and heating, as a clear warning sign that vacancy rates are becoming worrisome.

Political Responses and the Path Forward

With a provincial election two weeks away, party leaders offer competing visions for the housing file. Québec solidaire proposes an $11.8-billion plan to add 50,000 social housing units, splitting the effort between new builds and converting 25,000 existing private units. The Parti Québécois centers its strategy on first-time homebuyer assistance, relaxed construction regulations, and lower immigration levels. Meanwhile, the Quebec Liberal Party and the Coalition Avenir Québec emphasize boosting overall supply, with the Liberals targeting 100,000 units annually through prefabricated construction.

RCLALQ maintains that these supply-heavy platforms will only partially satisfy renter needs since they fail to directly address the deep deficit in truly affordable and social housing. Jean-Philippe Meloche suggests the market will eventually correct itself as prices and vacancy rates adjust over time, though he acknowledges the transition period remains punishing for low-income renters.

Frequently Asked Questions

What is the average vacancy rate for rental units in Montreal?

According to the Canada Mortgage and Housing Corp., the citywide average vacancy rate sits at 2.9 per cent.

Why are vacancy rates so high in new Montreal apartment buildings?

Experts attribute the high vacancy rate—reaching 8.4 per cent for builds between 2022 and 2025—to units being priced too high for the average tenant and a mismatch in unit sizes that fail to serve families.

How do older buildings compare to new builds in Montreal?

Buildings constructed before 1940 maintain a much tighter vacancy rate of 2.1 per cent, reflecting steady demand for traditional, established housing stock.