Slashed immigration targets are raising big questions for the national housing market
Canada’s population growth continued to lose momentum in the second quarter of 2025, as the country’s efforts to curb the number of non-permanent residents (NPRs) fell short of federal targets.
According to a recent RBC analysis, as of July, the population reached 41.7 million—up just 0.9% year-over-year, with most of that increase occurring in 2024.
Non-permanent residents remain above federal targets
The share of NPRs in the total population dropped for the third consecutive quarter to 7.3%. However, this remains well above the federal government’s stated goal of reducing NPRs to 5% by the end of 2026.
“We’re still a long way from the target,” RBC economists Cynthia Leach and Salim Zanzana, said.
“So far, only 11% of the required net outflow has been achieved, even though we’re already a quarter of the way through the period.”
Despite the government scaling back permanent resident targets, immigration levels have stayed historically high, providing some support to the slowing growth rate.
"Immigration continues to be high from a historical perspective—continuing to cushion slowing population growth," the report said.
Meanwhile, Canada’s population growth slowed to just 0.1% from April to July 2025, according to Statistics Canada. This slowdown happened because the number of non-permanent residents dropped sharply, following stricter federal immigration policies introduced last year.
The muted pace of NPR outflows is expected to accelerate as more permits expire, eligibility criteria tighten, and the weak labour market limits opportunities for new arrivals. RBC's base case now assumes the NPR adjustment will stretch into 2027.
Projections for population growth remain subdued, with estimates holding at 0.9% for 2025, 0.1% for 2026, and 0.2% for 2027.
Demographic shifts impact housing and regional growth
The slowdown is especially pronounced in Ontario and British Columbia, where population growth has stalled for two consecutive quarters due to sharp declines in NPRs.
Canada’s median age also edged higher in July, underscoring the demographic challenges ahead. "The country will no longer be able to push out further effects of population aging given the planned immigration policy reversal, and final boomers retiring," the report said.
Slower population growth and a rising median age could dampen long-term housing demand, particularly in markets that have relied on immigration to drive sales and price growth.
In October, former immigration minister Marc Miller said the government would pause its population growth plans. The target for new arrivals in 2025 was cut from 500,000 to 395,000. For 2026, the target dropped to 380,000, and for 2027, it was reduced further to 365,000.
In Toronto, fewer newcomers this year have helped push rents down and caused condo demand to drop. In the past, new immigrants made up a large share of renters, encouraging investors to buy and rent out units.
“I do think [the condo slowdown] was largely because Toronto attracts the highest percentage of immigrants within Canada. Roughly 30% of individuals coming into Canada end up in Toronto,” he told Canadian Mortgage Professional.
“So I think that supported the really strong housing demand that we saw around the pandemic and all of this activity.”
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