Canada's International Student Cap, Explained in Numbers

A few days after Toronto pushed through a 10.5% property tax increase, another new rule started making headlines, and plenty of people say it will move the housing market. The federal government announced a two-year cap on international students, and it is framing the move as a way to cool housing prices. I am Moe Asgarian, a Principal Real Estate Broker in Toronto.

Let us put this in numbers, using Canada's own official data, because international students are one of the biggest forces on the Toronto market, both as renters and as eventual first-time buyers.

The new cap in plain numbers

For 2024, the government plans a 35% cut to study permits at the undergraduate level. To see why that is a big deal, look at the trend. In 2015 Canada added about 200,000 new study permits. That doubled to roughly 400,000 by 2019. COVID stalled it in 2020, then 2021 jumped hard, 2022 reached 550,000, and 2023 hit 580,000, and that last figure only runs through November. The total number of people holding a study permit in 2023 was close to one million. The cap brings new permits down to about 360,000 for 2024.

Where students come from, and where they live

By citizenship in 2023, India led with 36.8%, more than a third. China was second at 9.4%, then Nigeria at 5.5%, the Philippines at 4.9%, France at 2.6%, and Hong Kong at 1.3%. The remaining 39.5% came from 152 other countries, including Iran, whose share is under 1%. By province, Ontario holds most of them at 52.7%, followed by British Columbia at 19%, Quebec at 12.1%, and Alberta at 6.1%. Because Ontario carries so many students, its cut lands closer to 50%.

The math behind Ontario's 50% cut

Secondary school and below are exempt, and so are master's and higher. In 2023 Ontario issued 300,000 study permits, and 42,000 of those, about 14%, were for secondary school or lower, so expect those to continue in 2024. That leaves roughly 240,000 post-secondary permits. Using the University of Toronto's 70-to-30 undergraduate-to-graduate split as a sample, about 168,000 went to undergraduates. Halve that and you land near 84,000, which lines up with the roughly 50% reduction the new rule targets.

Who takes the hit

The clearest impact is on schools, especially small private colleges that charge international students steep tuition. Big universities may pick up a larger share. But Ontario's universities are already squeezed. Back in 2019 the Ford government cut domestic tuition 10% and it has been frozen since. In 2023, 10 of Ontario's 23 universities ran deficits totalling $175 million, projected to reach $273 million in 2024. International students are the main revenue source because they pay far more than domestic students, and Ontario universities receive 57% less government funding than those in other provinces. Restaurants feel it too, since international students made up about 4.6% of the food service workforce in 2023, and banks lose new customers who each bring roughly $20,000 in deposits.

The new work permit rules

Several changes come with the cap. From September 1, 2024, students in programs that used to grant a post-graduation work permit may no longer qualify. Graduates of master's and other short programs lose access to the three-year post-graduation work permit. Spousal work permits will be issued only to spouses of master's and doctoral students, not to spouses of undergraduates or college students. And students can no longer work full-time while studying, with a cap of 20 hours a week. Keep in mind this was recorded in early February 2024, and these rules can shift month to month.

What it means for Toronto rent and prices

Toronto has six universities and four colleges, and international students make up a real share of renters. The University of Toronto downtown enrolls 70,000 full-time students, and 30% were international in 2023. Toronto is already the third most expensive city for rent in Canada, after Vancouver and Burnaby. My short prediction: this will not pull rents down in 2024, but it should slow how fast they rise. On the buy-and-sell side, even after all these cuts, 2024 permits land near 2018 and 2019 levels, which is still high. Foreign students can buy up to $500,000, and in Toronto the odds of finding a condo at that price are slim, so they play almost no role in the sale market. It takes years for a student to move from studying to buying, so I do not see this group swinging home prices in the short term or even over the next two or three years. If you are weighing a move in this market, my team and I can help. Fill out the form at the bottom of this page or book a free consultation. Stay well and take care.