Vacancy rates rise while rent increases slow in Kitchener-Cambridge-Waterloo, says new housing report

A generic rent sign in front of a home. (Shutterstock)

A report by the Canadian Mortgage and Housing Corporation is shedding new light on the fall 2024 rental market in Kitchener, Cambridge and Waterloo.

The most significant factor, it noted, was the federal government’s decision to reduce study permits for international students by 35 per cent.

“Historically, [Kitchener-Cambridge-Waterloo]’s role as an education hub has placed significant pressure on its rental market,” it said.

CMHC’s report, which was released Tuesday, showed the direct impact of the international student cap.

“The vacancy rate reached its highest level since 1993,” it said. “This was the result of supply growth outpacing demand.”

Slowdown in rent increases

The CMHC report also looked at rental prices for purpose-built units.

The average price for a 2-bedroom was $1,766, representing an annual increase of 4.2 per cent, down from 7.4 per cent over the same period in 2023.

“Lower turnover meant fewer opportunities to raise rents to market rates,” the report explained.

The average vacancy rate was listed as 3.6 per cent.

Another factor was a boost in available units.

The report pointed out that greater supply, particularly in Central Kitchener, Waterloo and Cambridge, contributed to a slowdown in rent increases and eased pressure on pricier units.

Rental rates

While there were more units on the market, it did not seem make a huge impact on affordability.

“Affordability for lower-income renters remained a challenge with rents for newer 2-bedroom rental units averaging $2,356,” the report read. “The vacancy rate was below 1 per cent for units that are affordable (at, or below, 30 per cent of income) to the bottom two renter household income quintiles.”

Condo market

CMHC said vacancy rates for condominium apartments remained low, at 0.4 per cent, for units in Kitchener, Cambridge and Waterloo.

The average for a 2-bedroom unit was listed at $2,013.

“This difference was partly due to condominium apartment owners prioritizing quicker rental turnover, contributing to lower vacancy rates,” the report explained. “These owners were more willing to make concessions to rent their units than landlords in the purpose-built market, as they had less capacity for financial losses.”

Big city trend

The Kitchener-Cambridge-Waterloo area was not the only one with slower rent growth and rising vacancy rates.

The report said the Greater Toronto Area had the lowest rent growth of all major urban centres in Canada, increasing 2.4 per cent annually in fall 2024, compared to 8.7 per cent a year earlier.

Vacancy rates, meanwhile, were higher in the suburban areas including Durham, York, Peel and Halton regions.

Turnover of “affordable” units, the report noted, also reached a “new low.”

“Supply remained scarce for low-income renters, with a vacancy rate of only 0.4 per cent for the least expensive units.”

2024 vs. 2025

The CMHC report only focused on the rental market in fall 2024.

A separate update, also sent out Tuesday, provided a brief overview of the largest rental markets in the first few months of 2025.

It stated that advertised rents declined in some cities due to increased supply.

“In Calgary, Toronto, Vancouver, and Halifax, advertised rents declined between 2 per cent to 8 per cent year-over-year, while Edmonton, Ottawa, and Montréal continue to see an annual increase in the average advertised rent, but at a slower pace,” the report said.

CMHC added that slower international migration and a sluggish job market also contributed to the drop.