Canada's Immigration Cuts and What They Mean for Housing

As of November 2024, Canada is pulling back on immigration, and the part of the housing market that feels it first is rent. Fewer newcomers means fewer tenants, softer rents and thinner income for investors. The same slowdown pushes interest rates lower, which helps buyers. Over a few years, that trade favours stability.

I am Moe Asgarian, a Broker in Toronto, ranked 47th in the world at RE/MAX, and what follows is the read I have been giving my own clients as these rules land.

What the Federal Government Announced in October 2024

In October 2024 the federal government said it wanted to line population growth up with the capacity of infrastructure and social services, so it is lowering the number of people who receive permanent residence. The plan brings that number down over three years: 395,000 in 2025, 380,000 in 2026 and 365,000 in 2027. The earlier target had been in the range of 500,000 people a year, so the drop is steep. Canada is also controlling the number of temporary residents for the first time, international students and foreign workers included, with a reduction of 30,000 and a 2025 figure of around 300,000. Mr. Trudeau said himself that the Liberal immigration policy had not succeeded and had not reached the goal set for it.

Why Fewer Newcomers Slows the Economy

Cutting the inflow of newcomers in a country like Canada hits gross domestic product directly. The Bank of Canada has said these changes will affect economic growth, and official statistics show that part of Canada's growth has come from population increase and immigration. As of late 2024 the Bank's projection sits at 2 to 3 percent, and the estimate may be revised down to somewhere near 1 percent. Read that quickly and it looks like good news for housing, because weaker growth usually means lower interest rates, and cheaper money is what this market has been waiting for. But housing is not one single market.

Rents Are Where the Effect Shows Up First

The rental market is the piece that moves fastest. If immigration to Canada drops, rents feel it almost immediately, and the income owners and investors collect from condos and rental houses comes down with them. Honestly, even in late 2024, with newcomers still arriving in volume, a lot of units are sitting there looking for tenants and cannot find one at a high rent. That is the real condition of the rental market as I write this in November 2024, before the new limits have had time to work through. A smaller pool of tenants will not fix it.

Buyers and Investors Are Not in the Same Position

Lower borrowing costs can make this market more attractive to buyers and investors than it has been. Surveys published in November 2024 show Canadians are broadly optimistic about rates coming down and feel they will be able to invest over the next few years and borrow cheaply, and if that confidence reaches first-time buyers it is a very good thing. For someone buying purely as an investment, though, falling immigration is not good news. Cheaper money may give prices a nudge, but if you are chasing cash flow or a quick profit, a smaller pool of potential customers works against you.

Where I Still See Opportunity in Greater Toronto

I still think that if you are looking at building and at a long hold, Greater Toronto has good openings. Even in late 2024, with a solid down payment, you can buy something where the rent covers the costs of the property and the value grows at a reasonable rate each year, and that is the work I have done for many of my clients through these months. My overall view is that the rental market gets wobbly for a while, but that managing the arrival of newcomers better can, across a few years, favour a stable market and sane growth instead of the swings we have lived through.

If you are deciding whether to buy, sell or hold through this change, fill out the form at the bottom of this page or book a free consultation and we can go through your numbers together. Stay well and take care.