Ontario's Rental Supply Gap Projected To Surpass 200,000 In Next 10 Years

Ontario is on track to face a significant rental housing shortage, with a projected gap of over 200,000 units by 2034. Despite recent efforts to increase construction, a new report from the Federation of Rental-housing Providers of Ontario (FRPO) and Urbanation indicates that the province is not building rental units quickly enough to meet the growing demand.

The report highlights that between 2025 and 2029, Ontario is expected to experience a shortfall of approximately 71,000 rental units. This gap is anticipated to widen further between 2029 and 2034, with an additional 136,000 units needed. The primary driver of this demand is the province's rapid population growth, fueled by the arrival of over 1.3 million newcomers in the past three years.

In 2024, Ontario saw a record addition of over 50,000 purpose-built rentals and condominium units—the largest annual increase in over 35 years. However, this surge in supply did not alleviate the tight rental market, as vacancy rates remained at a low 2.7%. This suggests that the new units were quickly absorbed by the existing demand.

The construction of new rental units is facing challenges. In 2024, starts for purpose-built rentals declined by 5%, marking the first decrease in 11 years. The condominium market also experienced a downturn, with a 25% drop in new starts and over 2,800 project cancellations. These setbacks are attributed to rising interest rates and decreased investor confidence.

To address the looming shortage, the FRPO emphasizes the need for policies that make building purpose-built rentals more economically viable. This includes reducing construction costs and streamlining approval processes. Without such measures, the rental supply gap is expected to continue growing, exacerbating affordability issues for renters across the province.

Ontario's rental housing crisis underscores the urgency for coordinated action among government, industry, and community stakeholders. Implementing effective strategies now is crucial to ensure that the province can meet the housing needs of its residents in the coming decade.