Here's how Ontario's major rental markets changed in 2025

Canada's rental market started 2025 off in a markedly different position than the past three years, which saw intense competition, record-low vacancies, and sky-high rent prices.

However, according to the Canada Mortgage and Housing Corporation's (CMHC) latest Rental Market Report, historically strong rental construction, coupled with softer demand driven by slower population and economic growth, eased rental pressures across the country's largest cities.

Vacancy rates rose in almost every major city, with the national purpose-built rental rate increasing to 3.1 per cent, which is up 2.2 per cent from last year and above the 10-year average. Still, affordability challenges stayed put, especially for renters looking for wallet-friendly units.

Here's a look at how Ontario's major rental markets performed in 2025, according to the report.

Greater Toronto Area

The GTA started the year off with a noticeable cooling in rental market conditions. Consistent with the CMHC's forecast, the vacancy rate for purpose-built rental units in the region rose to three per cent, yet rents continued to rise, with the going rate for an average two-bedroom rent increasing 3.5 per cent to $2,034.

Rents for smaller studio and 1-bedroom units slowed this year amid intense competition from rising condominium supply.

The GTA's condominium apartment market recorded a vacancy rate of one per cent, with a slight increase in the average two-bedroom rent to $2,904.

The report notes that a number of factors drove the softening of the region's historically tight rental market, namely declining international migration (especially international student enrolment), and a weakening economic environment.

Neighbourhoods with major post-secondary institutions actually saw some of the sharpest increases in vacant units. Downsview, which is home to York University's Keele campus and two colleges, saw its vacancy rate climb from just 0.7 per cent in 2023 to 3.1 per cent in 2025.

Source: CMHC.

Throughout 2025, newly built rental units also struggled to find more tenants than older ones. Projects completed within the past three years recorded vacancy rates near seven per cent, and approximately 75 per cent of new buildings offered move-in incentives (typically one to two months of free rent) to attract tenants.

Toronto also witnessed one of the highest unemployment rates among major Canadian cities in 2025, particularly among those aged 15-24. Affordability also remained strained in the region throughout the past year, as the average earner still needed 42 per cent of after-tax income to rent a vacant one-bedroom unit, and two-thirds of a minimum wage earner's disposable income was needed to rent a vacant studio apartment.

Hamilton

Hamilton's rental market saw its vacancy rate climb to 3.6 per cent in 2025, which was its highest level since the pandemic and above CMHC's projections. Much of this shift can be attributed to declining student demand, especially where McMaster University and Mohawk College students are concentrated.

Downtown Hamilton experienced a wave of condo completions this year, which intensified competition with newer purpose-built rentals.

Overall, purpose-built rental supply remained mostly steady through 2025, but there was a near-record number of units under construction in Q3 of 2025, indicating "strong future growth."

Tenants in Hamilton also had more options throughout the year, as more supply became available in the second and third rental quarters.

Kitchener — Cambridge — Waterloo

The vacancy rate in this region remained the same in 2025; however, there were notable shifts between sub-markets. Similar to other cities with major post-secondary institutions, the federal cap on international study permits eased demand in areas where students are typically concentrated, namely near the University of Waterloo and Wilfrid Laurier University.

U.S. tariffs also had a notable impact on the region's rental demand. As the report notes, Kitchener – Cambridge – Waterloo has one of the province's most "tariff-exposed economies," with many residents working in the motor vehicles and parts manufacturing industry.

Overall, rental apartment supply in the region increased by 2.8 per cent in 2025. Although renters benefited from increased choice, most new units were still not attainable for low-income renters.

London

London witnessed its highest vacancy rate for purpose-built rental apartments since 2010 at four per cent. The report attributes this to a decline in international migration, a softening economy, and record-high supply increases.

"Although we expected market conditions to ease, weaker-than-expected demand pushed the vacancy rate above our forecast," the report reads.

Similar to other Ontario cities, London's rental market has historically been supported by international student demand, but a sharp drop in enrolment over the past two years has led to higher vacancy rates. Still, the city's purpose-built rental apartment supply grew by 2.1 per cent this year, with over 2,500 units completed between January and September, which surpassed a record set in 2024.

Ottawa

Ottawa saw a modest easing in its rental market in 2025, with the purpose-built vacancy rate increasing to three per cent. Weaker demand, which stemmed from fewer international students and a higher local unemployment rate, contributed to the shift, according to the report.

Vacancy rates were the highest for newer units, which reached 6.7 per cent for those built after 2015, which was more than twice the average vacancy rate in Ottawa.

Source: CMHC.

Certain areas, including Sandy Hill and Lowertown, which is a university neighbourhood, had more units available than other parts of the city.

Despite the easing, the vacancy rates for the lowest-rent units remained under one per cent, while higher-rent units posted rising vacancy levels. Ottawa also recorded slower rent growth, reaching 3.4 per cent, after an increase of nearly five per cent last year.

St. Catharines — Niagara

According to the report, St. Catharines — Niagara's average vacancy rate remained at 3.9 per cent this year, similar to 2024. Niagara Falls recorded a higher vacancy rate thanks to several factors, including a decline in work permit holders, a 1.8 per cent increase in rental supply, and a weaker labour market caused by tariff-related impacts.

The region's purpose-built rental market saw an average two-bedroom rent of $1,527, up by 5.5 per cent.

Windsor

Windsor's rental vacancy rate remained elevated at 3.7 per cent in 2025, which exceeded both provincial and national averages. The ongoing international student numbers, along with falling temporary foreign worker counts, continued to drive weakened rental demand.

Many sectors central to the city's economy, including manufacturing and construction, also faced layoffs thanks to tariffs, which prompted a considerable number of residents to relocate to other areas with strong labour markets, such as Alberta. As a result, Windsor recorded the highest unemployment rate among the country's metropolitan areas in October at 10.1 per cent.

Despite this, supply continued to grow in suburban, beachside communities, including Amherstburg and North Essex County.

Windsor's purpose-built rental market vacancy rate was 3.7 per cent in 2025, and the average two-bedroom rent was $1,454, up by 3.6 per cent.