2025 COULD BE A TALE OF TWO CITIES IN LONDON’s HOUSING Market, According to the Latest Forecast by the Canada Mortgage and Housing Corp. (CMHC). Retenters May See A Continuation of Last Year’s Dropping rents as More Supply Hits The Market. For Sellers, An Expected Market Rebound May Be Delayed to the Second Half of the Year, or Even 2026. Sandwiched in Between is a slowdown in home construction. Jonathan Juha Reports.
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The Rental Market
Compared to Other Cities in Ontario, 2024 was a strong year for Home Construction In London, Especially on the Rental Side, With Thousands of New Units Hitting The Market. That Helped Increase London’s Vacancy Rate to 2.9 per cent, The Second-Highest Level in the Past Decade (in 2023 It was 1.7 per cent).
CMHC Expects More Rental Units Will Hit The Market This Year As Developers Complete Projects Already Underway, Increasing the Overall Supply in the City. Coupled with a projected slowdown in Population Growth, the Result of Caps on International Students and Immigration Overall by the Federal Government, the City Could See the Vacancy Rate Rise Even Higher This Year.
“We saw the holidaycy rate rise quite a bit in london because of two factors: you had a lot more supply added. . . and there were fewer renters out there because the cap put on international studs. So, we think the renal market is going to play out kind of in a similar fashion this year, “Said Anthony Pasarelli, CMHC’s lead Economist for Southern Ontario.
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“The Cap on Tempororary Residents is Going to continue to release of Dampen Rental Demand, Especially in A Market Like London, where a lot of the Growth in the Population was from temporal residents.”
Housing Construction
Housing Construction is cyclical. And 2024’s strong performance will impact the number of projects started this year, with the biggest decline likely to be seen in the ren up Side of the market, cmhc say.
“There’s Still a Lot Under Construction Currently That Will Be Completed in the Next Year or Two. We think developers are signaling that we go to see a lot less group Broken (on) New Projects because so much underway, “Passarelli Said, Adding the Softening in Demand Experienced on the Rental Side Also Will Impact Developers’ APPELTITE FOR NEW PROJECTS.
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On the Flip Side, Developers Could Turn their Attention to Building Other Types of Housing, Such As Single-Family Homes and Townhouses. While Purpose-Built Rentals Boomed in the Past Two Years, the Single Detached and Townhome Segment of the Market Has Been Lagging.
“That Will Offset Some of the Declines in the Apartment Side, but not totally. So, we think (2025) is going to be a slower year for new home construction starts, ”Passarelli Said.
Resale Housing Market
CMHC Believes London’s Resale Market is Going to Rebound After Two Years of Lacklustre Sales Numbers. The Question Now Remains: When?
Many analysts projected that 2025’s Spring Market Would Be a Strong One, Especially after the Bank of Canada Began Cutting Interest Rates As Inflation Came Under Control.
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But the Economic Uncertainty Created by the Threat of Tariffs from the Us May Make Some Buyers, Who Were Expedted to Finully Jump Back Into the Market, Instratead Wait A Little Longer Before Before Porchasing A Home.
Last Month, for Instance, Only 370 Homes Were Sold in the London Area, A Drop of 20 per cent Compared to the Same Month Last Year.
“Sales Really don Seem like they can get much lower than they are. . . So we think that they are poisoned to rebound, ”Passarelli Said. “Now, How Much They Rebound Really Dependes On This Level of Uncertainty We Currently Have In the Economy With The Tariff Threats. There are just, at least currently, a lot of people who are choosing to wait and sit on the sidelines along.
“Depending on How Long This Plays Out, It’ll Determine Whhether we see the Rebound in the Sales Happen Later This Year or Into Next Year.”
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