After years of record-high immigration that fueled housing demand, the federal government has significantly reduced immigration targets for 2025-2026. These changes are already having a measurable impact on the housing market, particularly in the rental sector.
What Changed
The government lowered permanent resident admission targets and tightened rules around temporary residents, including international students and temporary foreign workers. After years of population growth exceeding 1 million annually, the pace has moderated considerably.
Impact on Rental Markets
The rental market has felt the change most acutely. Vacancy rates in Toronto are rising in 2026 as new rental units come online while population growth moderates. This is providing relief for renters who faced bidding wars and rapid rent increases in 2023-2024.
Impact on Home Purchases
In the home purchase market, the effect is more nuanced. While reduced immigration has softened demand at the entry level (particularly condos), the fundamentals for family-sized housing remain strong. Canada's existing population continues to form households, and the pent-up demand from years of underbuilding hasn't disappeared.
Regional Differences
Markets most affected by immigration changes include:
- Toronto downtown condos: High concentration of newcomer renters and investors
- Brampton and Mississauga: Popular settlement areas for new immigrants
- Waterloo Region: Tied to international student enrolment at local universities
Markets less affected include:
- Established suburban communities: Kleinburg, Oakville, and other family-oriented areas
- Luxury segment: Driven by domestic wealth, not immigration
Long-Term Outlook
Canada's long-term population growth trajectory remains strong. Immigration targets may be adjusted in future years, and the fundamental housing supply shortage — estimated at millions of units nationally — will take decades to resolve. The current moderation in demand provides a breathing room, but it doesn't change the long-term supply-demand imbalance.
Understanding these dynamics is key to making informed buying decisions. Speak with our team for personalized market insights.