Immigration cuts slow Canada's population growth

Canada’s population growth, once driven by record immigration, slowed to just 0.1% from April to July 2025, according to Statistics Canada.

This is the slowest second-quarter growth since 1946, outside of the pandemic, and much lower than the 0.7% and 0.8% increases seen in 2023 and 2024.

The slowdown was driven by a sharp reduction in non-permanent residents, a direct result of tighter federal immigration policies introduced last year.

The number of non-permanent residents dropped for the third time in a row, reaching 7.3% of the total population in the quarter, versus 7.6% at its peak. Most of the decline came from foreign students and temporary workers leaving the country.

The federal government’s 2024 move to restrict temporary foreign workers and slash study permits has reversed the post-pandemic surge that saw Canada’s population swell by nearly a million annually from 2022 to early 2025.

“After peaking at 3,149,131 non-permanent residents on October 1, 2024 (7.6% of the total population), that number dropped to 3,024,216 by July 1, 2025 (7.3% of the total population),” the agency said.

The second quarter alone saw a net loss of 58,719 non-permanent residents, one of the largest quarterly declines on record.

After winning the April election, Prime Minister Mark Carney announced he would limit temporary workers and international students to under 5% of Canada’s population by 2027, from the recent peak of 7.3%. Carney said this move aims to reduce pressure on housing and public services.

Housing market cools as demand wanes

The impact on housing has been immediate. Bank of Montreal (BMO) senior economist Sal Guatieri said during a conference this year that lower immigration “will be a bit of a dampener on consumer spending and, of course, the housing markets and rental markets for a little while.” 

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.

Now, the condo market is struggling. Federal housing minister Gregor Robertson warned that Toronto’s condo sector “is now in free fall.”

“There’s far too much condo product in both Toronto and Vancouver,” Robertson said in a Toronto Star interview. “That type of housing was overbuilt in recent years, and it’s not selling in today’s market.”

Joel Fox, co-founder and chief operating officer at real estate closing platform Ownright, told Canadian Mortgage Professional that the market didn’t appear to be turning a corner, either.

“The hot question on everyone’s mind right now is ‘Why aren’t these selling when the prices drops are happening?’ But the price drops aren’t enough.”

According to the latest National Rent Report, the average asking rent for residential properties dropped to $2,088 in February, a 4.8% annual decline—the largest since April 2021 and the fifth straight month of year-over-year rent decreases .

Implications for mortgage professionals

For mortgage professionals, the cooling market presents both challenges and opportunities. First-time buyers may find improved affordability, but landlords and investors face shrinking rental demand.

The Bank of Canada has flagged low population growth and a weak labour market as risks to household spending, a rare bright spot in an economy that contracted last quarter.

With new immigration targets due November 1, Prime Minister Mark Carney’s government faces restoring public confidence in the system while ensuring enough skilled workers to support housing and infrastructure ambitions.