Some say migration trends are putting a dampener on the market's prospects. Others aren't so sure
Population growth helped spur red-hot housing markets in British Columbia and Ontario over the past decade, with those two provinces benefitting from strong migration and constant demand for homes – especially in Toronto and Vancouver.
But with the Canadian federal government now trimming immigration targets for the years ahead, that steady stream of new would-be buyers and renters is no longer guaranteed, and the condo markets in those two cities are already in the midst of a sharp correction.
That’s raised questions over how a slowing pace of immigration in the coming years will impact the national housing market, and whether homebuying activity will suffer from milder demand from new Canadians.
Early 2025 saw both BC and Ontario experience population declines, with both provinces losing thousands of residents in the first quarter – their largest quarterly losses since comparable records began in 1951, according to Statistics Canada.
The trend arrived even before new prime minister Mark Carney announced lower immigration targets for the coming years, with the federal government planning to admit 395,000 permanent residents in 2025, 380,000 in 2026, and 365,000 in 2027.
Still, it’s by no means a surefire bet that those reduced targets will put a dampener on housing market activity across Canada.
Canadian Imperial Bank of Commerce (CIBC) said in a recent report that national population growth is still likely to exceed current government forecasts, with deputy chief economist Benjamin Tal challenging StatCan’s projection that population growth will fall to 0.3% in 2025 and decline by 0.2% next year.
Tal says StatCan has overestimated the number of people expected to leave Canada when their visas expire, and is also not accounting for long-term visitor permit holders. He believes population growth will hit 1.1% this year and stay close to 1% in 2026, likely continuing to strain the housing market.
National housing agency continues to monitor immigration trends
Canada Mortgage and Housing Corporation (CMHC) highlighted lower immigration levels as a cause of “significant uncertainty” for the Canadian economy looking ahead, and said homebuying activity is likely to falter in Ontario and BC because of that trend.
“We expect sales in these markets to remain below their 10-year averages,” CMHC said. “This is due to ongoing affordability challenges and the more notable impact of new immigration targets.”
Rental demand across Canada is also likely to fall between 2025 and 2027, CMHC added, thanks to a combination of lower immigration and a higher number of first-time homebuyers.
But the agency says Canada could also become more attractive to immigrants if the US continues to tighten its own immigration policies, leading to a higher number of new Canadians. In that scenario, “by late 2026, the economy rebounds and a growing population boosts home sales,” CMHC said.
Meanwhile, if the US eases back on its current trade war and Canadian immigration meets its current targets, that could also have a positive impact on the market. In that scenario, “more homes are built thanks to better financing and business conditions,” CMHC said.
“Stronger job and income growth combined with lower mortgage rates make homeownership more accessible. Higher demand pushes home prices up more quickly.”
How should Canada balance immigration levels with housing affordability and economic growth? Share your insights in the comments below.
