The Kitchener–Cambridge–Waterloo (KCW) census metropolitan area’s purpose-built rental apartment vacancy rate climbed to 4.1% in 2025, while average rents rose roughly 3%, according to CMHC’s 2025 Rental Market Report. In the KCW CMA, average rents were about $1,545 for one-bedroom units and $1,832 for two-bedroom apartments.
Condominium rentals in the KCW CMA remained very tight, with a condominium vacancy rate of just 0.8% reported by CMHC. CMHC attributes the overall easing in the rental market to a supply-demand mismatch: a sizable increase in new rental completions coincided with weaker demand from non-permanent residents, including fewer international students after the federal government set a 2025 study-permit target of roughly 437,000 — about 10% below 2024’s target.
CMHC notes the KCW market’s vacancy rate is a multi-decade high; similar peaks were last seen in the early 1990s. According to CMHC’s historical series, the KCW vacancy rate was about 1.5% in 2023 and 2.2% in 2024 before rising to 4.1% in 2025.
Landlords have responded to softer leasing conditions by offering incentives such as a month of free rent, moving allowances and signing bonuses to help lease newly completed purpose-built units. CMHC also warns that the high cost of recent construction keeps a floor under rents for new units, even as market-wide rent growth moderates.
Large new developments in Uptown Waterloo, such as The Barrel Yards — the project’s final phases would add as many as about 889 homes to the area — are now leasing in a market that is beginning to cool, and their developers face the task of filling mid- to higher-priced suites.
“You have more supply coming on the market and the potential for demand to continue to level off or slow down because of the international student cap in particular,” said Anthony Passarelli, lead economist for Southern Ontario at CMHC, in a CityNews interview. Local officials in the City of Waterloo and the Region of Waterloo say the supply boost could be used to help address the centralized affordable-housing waitlist under their affordable-housing plans and strategies.
For students and young professionals hunting in Uptown, the greater choice may bring short-term relief. Meanwhile, landlords and developers will watch closely to see whether rising supply and slower international student arrivals push vacancies higher through next year, or whether rental prices regain momentum as lease-ups complete.
