Reading the CMHC 2025 Rental Market Report: What Ontario Investors Need to Know
CMHC's 2025 Rental Market Report shows vacancy rising across Ontario. Here is a straight read of what the data says, what it means, and what it does not mean for long-term multifamily investors.
CMHC released its 2025 Rental Market Report in December 2025. For Ontario multifamily investors, it is required reading — not because it is alarming, but because understanding the data accurately is the foundation of sound investment decisions.
Here is what it actually says.
The National Picture
Canada's national purpose-built apartment vacancy rate rose to 3.1% in October 2025, up from 2.2% in 2024 and above the 10-year national average. This is the highest vacancy rate Canada has seen since before the pandemic tightening cycle. CBRE's 2026 market outlook forecasts the national rate could climb further to 4.5% by end of 2026 if population growth remains constrained.
CMHC attributes the increase to two main forces: historically high rental unit completions, driven in part by government-backed construction financing programs, and weaker demand caused by slower population growth and declining international student enrolment following federal permit caps.
Ontario's Major Markets
London-St. Thomas: Vacancy reached 4%, a 15-year high. The increase was driven by over 2,500 new units completed in the first nine months of 2025, combined with a sharp reduction in international student demand from Western University and Fanshawe College — the latter enrolling approximately 43,000 students, a significant share of whom have historically been international.
Hamilton: Vacancy climbed to 3.6%, the highest since the pandemic. Student demand from McMaster University and Mohawk College declined, and a wave of condo completions added competition for purpose-built operators.
Toronto: The purpose-built vacancy rate hit 3% for the first time since the pandemic. Rental condo vacancies remained lower. Approximately 75% of new buildings were offering move-in incentives.
Ottawa: Vacancy rose to 3%, with newer units (built after 2015) sitting at 6.7% — more than double the city average.
What the Report Does Not Cover
CMHC's Rental Market Survey covers purpose-built apartments in census metropolitan areas with populations above certain thresholds. Smaller markets like Chatham-Kent, Ingersoll, and many parts of Elgin County are not directly covered. Investors in these markets need to rely on local data sources, transaction comparables, and direct market intelligence.
The survey also captures conditions in October — a seasonal snapshot. Markets with large student populations typically see their lowest vacancy in the fall after September lease-up. The October data may understate the seasonal peak of vacancy in some markets.
The Rent Picture
Despite rising vacancy, average rents paid by existing tenants continued to grow. The national average for two-bedroom units rose 5.1% year-over-year, driven primarily by repricing at turnover. In-place rents for long-term tenants — especially in rent-controlled units — grew more slowly.
Asking rents for new leases are a different story. In several major markets, landlords have been reducing asking rents and offering incentives to compete for tenants in a more supplied market.
The Investment Implication
A softer rental market does not invalidate the long-term investment case for Ontario multifamily. It does require more conservative underwriting — realistic vacancy assumptions, moderate rent growth projections, and careful attention to debt service coverage in scenarios where conditions remain soft for longer than expected.
Investors who underwrite at current market conditions, rather than at the exceptional conditions of 2022, are well positioned to make sound decisions.