Rental Market Cooling: What London Tenants and Landlords Need to Know

Signs of Relief in the Rental Market

After years of relentless increases, rental markets across Canada are showing signs of cooling. Average asking rents have fallen 4.7% year over year nationally, and rent inflation in the Consumer Price Index has slowed from a peak of 9.0% in 2024 to 3.5% today.

For London, Ontario—a city with a significant rental population thanks to Western University, Fanshawe College, and major healthcare employers—these trends have meaningful implications for both tenants and landlords.

What's Driving the Change?

Several factors are contributing to this shift:

Slower population growth. Canada's dramatic shift from over 3% population growth to nearly 0% means fewer new renters entering the market. Net outflows of non-permanent residents exceeded 460,000 over the past year.

Increased rental supply. Canada has more than 180,000 purpose-built rental units under construction—the first time rental construction has outnumbered ownership housing. This new supply is beginning to moderate prices.

Economic uncertainty. Rising youth unemployment (now at 14.5%) and a weakening labour market mean some potential renters are doubling up or delaying household formation.

London's Rental Landscape

London's rental market has its own unique characteristics. The student population creates consistent demand in neighbourhoods like Old North, Masonville, and areas surrounding Fanshawe College. Healthcare workers at London Health Sciences Centre and St. Joseph's Hospital create steady demand for rentals in central and south London.

Typical rental prices in London range from $1,400 to $1,800 for a one-bedroom apartment in desirable areas, and $1,800 to $2,400 for two-bedroom units, depending on location and amenities. Houses for rent often command $2,500 to $3,500 or more in family-friendly neighbourhoods like Byron, Oakridge, or Lambeth.

What This Means for London Tenants

If you're renting in London, the current environment may offer some advantages:

More negotiating power. With vacancy rates increasing in some areas, landlords may be more willing to negotiate on rent or offer incentives like a month of free rent or included utilities.

Time to explore options. The urgency that characterized the rental market during peak years has moderated. You may have more time to find the right fit rather than accepting the first available unit.

Know your rights. With any rental situation, understanding Ontario's residential tenancy laws is important. If you believe rent increases exceed what's permitted, you have the right to question them.

What This Means for London Landlords

For property owners and investors, the shifting rental market requires adaptation:

Competitive pricing matters. With more options available to tenants, pricing your rental appropriately for the current market—not last year's market—is essential.

Property condition counts. Tenants with more choices will gravitate toward well-maintained properties. Investing in updates and repairs can help attract and retain quality tenants.

Location remains king. Properties in desirable locations—near campus, close to transit, in walkable neighbourhoods with good amenities—will continue to perform well even in a softer market.

Neighbourhoods to Watch

In London, certain areas continue to attract strong rental demand:

Near Western University: Old North, Masonville, and the Cherryhill area remain popular with students and young professionals.

Near Fanshawe College: Areas in the northeast continue to see steady student rental demand.

Established neighbourhoods: Byron, Wortley Village, and Westmount attract families and professionals seeking rental homes with character and walkable amenities.

Newer developments: Areas like Talbot Village and developments in south London appeal to tenants seeking modern finishes and newer construction.

Looking Ahead

The rental market will continue evolving as population trends, economic conditions, and housing supply shift. Whether you're a tenant looking for your next home or a landlord managing investment properties, staying informed about market conditions helps you make better decisions.

The Calford & Co. Real Estate Team keeps a close eye on London's rental and ownership markets. Whether you're considering an investment property purchase or exploring your options as a buyer transitioning from renting, reach out anytime for a conversation about the current market.