Housing predictions for Kitchener-Cambridge-Waterloo: Report

A report predicts new housing is expected to decline in Waterloo Region, while rental vacancy rates stay low.

The report by the Canada Mortgage and Housing Corporation (CMHC) released data on 12 additional municipalities in its 2024 Housing Market Outlook.

Earlier this year the organization’s report discussed major cities in Canada like Toronto, Ottawa and Vancouver. Many of the details were similar, depicting increasing prices for rentals and homes.

The cities of Kitchener, Cambridge and Waterloo were lumped together in the report’s second edition.

CMHC predicts high mortgage rates and low affordability have impacted pre-construction sales in the area —particularly in condominiums and apartments. 

Single-detached homes are expected to “trend up” over the next several years, the report reads.

New builds are declining this year, CMHC says, but could recover in 2025.

"Based on current trends, the housing stock…might not be keeping pace with population growth, let alone addressing the supply gap that must be closed to restore housing affordability," the report reads. 

Home prices in the region are expected to rise over the year, partly due to the declining interest rate and inflation, the report notes. Early in 2024, CMHC experts predict "weak sales" with little price growth.

The job market, "robust" GDP growth and investment attraction in the local market are part of the reason housing costs could rise in 2024.

Rental vacancies in the cities are expected to remain low, even though there will be additions to supply, the report says.

Some new supply will help get a few prospective homebuyers out of the rental market but the impact will be limited due to interest rate increases. 

"International migration is expected to continue driving population growth, although it is expected to slow from recent highs," the report reads.

International students are part of the reason rental demand is high, even though there is a two-year cap on new permits in 2024. 

Two-bedroom apartments are in high demand in the region, due to low vacancy rates. Another reason for the tight rental market is due to the difference in rent paid by new tenants versus long-term ones.

"The reason for this difference is that, once tenants vacate their units, landlords can increase rents to market levels," the report notes. "This situation indicates continued pressure on rental markets, particularly for new renters."