Despite record levels of purpose‑built rental construction, a new report shows Ontario is still not building enough homes to keep pace with long‑term demand—a gap that’s expected to widen significantly over the next decade. The analysis, released by FRPO and Urbanation, finds the province is on track to face a 121,000‑unit rental housing shortfall by 2036, driven largely by rapid population growth. With 1.4 million new residents projected to arrive over the same period, Ontario will need roughly 25,000 purpose‑built rental completions per year just to keep pace with renter household formation.
In recent years, purpose‑built rental development has accelerated at an unprecedented pace. Starts rose 37 per cent in 2025, surpassing 24,000 units, and climbed again to more than 32,000 units in the 12 months ending June 2026. By mid‑2026, a record 66,549 rental units were under construction across the province. This surge reflects the impact of targeted government policies and improved financing conditions, demonstrating that when the economics of rental housing improve, builders respond decisively. Still, the report emphasizes that these gains must be sustained—not viewed as a temporary peak—if Ontario hopes to close the gap between supply and demand.
A major structural shift is also reshaping the rental landscape. For the past decade, condominium rentals supplied the majority of new rental homes, accounting for 58 per cent of Ontario’s growth in rental supply. Over the next decade, that share is expected to fall to just 9 per cent. With fewer condo units entering the rental pool, purpose‑built rentals will need to shoulder nearly the entire burden of future supply—a dramatic shift that places even greater pressure on the development pipeline.
The projected shortfall is not limited to one region. The Greater Toronto and Hamilton Area alone is expected to account for 74,000 units, or 60 per cent of the province’s rental gap. And while some markets have experienced short‑term softening, the report cautions against interpreting current conditions as evidence that Ontario’s long‑term supply challenge has eased. Rental housing takes years to plan, finance, approve and build; a slowdown today will inevitably translate into fewer homes delivered tomorrow.
Government policies
While the recent surge in rental construction is closely tied to measures such as the federal HST rebate for new purpose‑built rentals, expanded access to financing, development charge relief, and Ontario’s 2018 exemption of new rental housing from rent control, many of these supports are temporary. The HST rebate requires projects to start construction by 2030, Toronto’s development charge reductions expire in 2029, and federal financing allocations run through 2031–32. Without long‑term stability, the report warns that momentum behind today’s record‑high construction levels could falter.
Ultimately, the challenge ahead is not simply reaching record levels of purpose‑built rental construction, but maintaining them. Read the full FRPO-Urbanation report here: Microsoft Word – Urbanation-FRPO_Ontario_Rental_Market_Study_Update_-_Aug_2026
