ONTARIO STILL FACING 121,000-UNIT RENTAL SHORTAGE DESPITE RECORD CONSTRUCTION

Even with Purpose-built rental starts at a multi-decade high, Urbanation-FRPO study finds it's not enough to close the province's rental supply gap by 2036

TORONTO – August 25, 2026:  Urbanation Inc., the leading source of data and analysis on Ontario's condominium and rental apartment markets since 1981, today released an updated Ontario Rental Market Study prepared for the Federation of Rental-housing Providers of Ontario (FRPO).

Ontario's rental housing industry is building at levels not seen in decades, yet the province remains on track for a 121,000-unit rental shortage by 2036, on top of an estimated 249,000-unit deficit already accumulated since 2016. Rental demand is projected to grow by 399,000 households over the next 10 years against only 278,000 units of new supply.

Purpose-built rental apartment construction starts rose 37% in 2025 to a multi-decade high of 24,298 units and climbed further to 32,147 units in the 12 months ending June 2026, driven by the full removal of the HST on new rental construction, CMHC's $55 billion Apartment Construction Loan Program, development charge relief, and the rent control exemption for new supply. Even at this pace, the study finds the industry cannot fully offset the collapse of the condominium sector, which supplied most of Ontario's rental growth over the past decade but is projected to supply less than 10% over the next 10 years as new condo sales hit their lowest level since 1990.

The 121,000-unit gap is heavily back-loaded into the second half of the 10-year projection as condominium completions largely disappear and population growth returns to trend. Today's improved conditions, with vacancy above 3% in 2025 and asking rents down roughly 10% from their late-2023 peak, reflect a temporary, policy-driven slowdown in population growth that occurred during a temporary spike in condo completions, both of which are expected to reverse by the end of the decade.

The recent improvement in affordability is releasing pent-up demand built up over years, which is limiting improvements to the current supply gap even as apartment completions reach their highest levels since the 1970s. Ontario millennials are twice as likely as baby boomers to still be living with their parents, with roommate households representing the fastest growing household type during the past two decades. Increased supply and lower rents are sending many of them looking for their own place. This release of pent-up demand, and potential undercounting of the population by Statistics Canada, suggest the shortage may be understated.

The Greater Toronto Hamilton Area carries the largest burden, with a projected 74,000-unit gap, more than 60% of the provincial total. The City of Toronto shows a thin 3,000-unit net surplus over the decade, which the study cautions is heavily front-loaded and impacted by recent population data that is likely to be revised. Southwestern Ontario and Ottawa are projected to remain in deficit, with gaps of 14,000 and 9,000 units respectively, provided current construction levels are maintained.

Sustaining this outcome requires holding purpose-built rental completions near 25,000 units per year for a decade, more than double the pace of the past 10 years, which depends on extending an incentive framework that starts expiring in 2029.

“The past two years have proven that Ontario's rental housing industry will build at generational levels when the economics work. But this progress shouldn't be mistaken for a market that has solved its supply problem. It should be treated as a foundation to build on, not a temporary stimulus to be withdrawn. The job is not finished.”

—Shaun Hildebrand, President of Urbanation

ABOUT THE STUDY

Since 2017, Urbanation has worked with FRPO to prepare market studies that measure the demand and supply of rental housing in Ontario. This update provides a current assessment of rental market conditions as of mid-2026, with updated demand and supply projections over the next 10 years to 2036, and a regional breakdown of the supply gap covering the Greater Toronto Hamilton Area, the City of Toronto, Southwestern Ontario and Ottawa.

ABOUT FRPO

Since 1985, the Federation of Rental-housing Providers of Ontario (FRPO) has been the voice of Ontario's rental housing industry and the leading advocate for quality rental housing. FRPO is the largest association representing those who own, manage, build and finance, service and supply residential rental homes in Ontario. FRPO has led the rental housing industry in Ontario for over 30 years, offering public advocacy, representation and promotion, industry research, standards and best practices, education and training, along with marquee industry events and awards.

ABOUT URBANATION

Urbanation is a real estate research and consulting firm that has been providing market data, in-depth market analysis and advisory services to the condominium and rental housing industry since 1981. Urbanation uses a multi-disciplinary approach that combines empirical research techniques with first-hand observations and qualitative information gathered through relationships forged within the industry over the past 45 years. Urbanation's subscription-based reports monitor the new condominium and rental markets in the Greater Toronto Hamilton Area, the Greater Golden Horseshoe and the Ottawa Region. Urbanation's clients include the province's largest developers as well as mid- and smaller-tier real estate organizations, institutional investors, major lenders, government agencies, and a variety of service providers.

www.urbanation.ca
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