London, Ontario's Rental Market in 2026: Reading the Data Honestly
London's vacancy rate has hit 4% — a 15-year high. Here is what the numbers actually mean for investors, and why the long-term case for the market remains intact.
London, Ontario made headlines in 2022 and 2023 for its exceptionally tight rental market. It is making headlines again in 2026 — this time for the opposite reason.
CMHC's 2025 Rental Market Report places London's purpose-built apartment vacancy rate at 4%, the highest level the city has seen in 15 years. This follows a rise from 1.7% in 2023 to 2.9% in 2024, a trajectory that has continued into 2025.
Understanding why this happened — and what it means for investors — requires looking beyond the headline number.
Two Forces Drove the Increase
The first is supply. London added over 2,500 new rental units between January and September 2025 alone, surpassing a record set in 2024. Much of this supply was approved and financed during the tight market conditions of 2021 and 2022, when the economics of new construction were compelling. It is now arriving at market simultaneously, creating short-term absorption pressure.
The second is demand. London's rental market has historically been anchored by Western University and Fanshawe College, which together enrol well over 80,000 students — Fanshawe alone has approximately 43,000. Federal caps on international study permits have significantly reduced international student enrolment over the past two years, removing a material source of rental demand that was particularly concentrated near both campuses.
What This Does Not Mean
A 4% vacancy rate is not a crisis. In a balanced rental market, vacancy of 3% is considered equilibrium. London is modestly above that, not deeply distressed. The city is not experiencing the kind of structural demand collapse that would signal a fundamental problem with the investment case.
Average rents, while growing more slowly than in recent years, have not declined materially. Landlords are competing more aggressively — offering move-in incentives, being more flexible on lease terms — but asking rents remain well above where they were four or five years ago.
London's Economic Diversification
This is not a market whose fortunes rest entirely on students. In 2024, CBRE recognized London as one of North America's top five emerging tech markets. The city has material employment across healthcare, agri-food, advanced manufacturing, and digital industries. That diversification is a structural advantage that distinguishes London from smaller single-industry markets.
In February 2026, Pier 4 REIT acquired a 558-unit apartment complex in London for $102.5 million — its largest acquisition to date — specifically citing the opportunity to acquire assets with under-market rents and long-term value-add potential. That kind of institutional activity reflects a long-term conviction that the market's fundamentals are intact even as near-term conditions soften.
The Investment Consideration
For buyers, a softer market creates opportunities that did not exist 18 months ago. Sellers who need to transact are more negotiable. GTA multifamily cap rates have moved from roughly 3% pre-2023 to 4.5 to 4.75% according to transaction data from CBRE and Colliers. Secondary Ontario markets like London typically trade at a spread above GTA pricing — offering investors better initial yields in exchange for accepting additional market-specific risk.
The Supply Pipeline Is Slowing
The conditions that made new construction viable in 2021 and 2022 no longer exist. Higher construction costs, tighter financing, and a more competitive rental market have significantly slowed new project approvals. The supply wave that is currently pressuring vacancy is a delayed response to a specific period — not a permanent shift in development economics.
For patient investors underwriting at current conditions — not the conditions of two years ago — London still offers fundamentals that compare favourably to most Canadian cities.