Is Less Immigration Behind Lower Rent in Canada? Not Exactly

Key Takeaways: 

• Immigration isn’t the main driving factor in housing prices 
• The market is oversaturated with rentals  
• Most price fluctuations come from other factors including interprovincial migration and over-investment. 

The Myth 

Starting in 2023, multiple opinion polls cited that Canadians believed immigration was the main reason housing prices in Canada, especially in the big cities, were skyrocketing. An annual report by the Environics Institute on Canadian sentiments about immigration in late 2025 found that 27% of Canadians believed immigration places strain on the supply of affordable housing. While it’s a drop over 38% in 2023, it’s still higher than it was 10 years ago (15%). 

In the face of public sentiment and Canadians’ less than positive outlook on immigration, IRCC made the decision to reduce the number of newcomers admitted to Canada each year, especially temporary residents. To be fair, a lot of this had to do with an unchecked number of international students, many of whom weren’t able to find places to live. Media caught on to this, and IRCC began to cut numbers and put in multiple other measures to tighten up Canada’s immigration system.  

In terms of the impact on housing prices, data has shown that yes, prices are coming down in the past two years since immigration levels have come down, but fewer newcomers to Canada isn’t the only reason why. 

The Reality 

While immigration does contribute to housing demand, it is not the dominant driver of rising or falling prices. 

A study by the Canadian government in 2025 found that between 2006 and 2021, immigration was responsible for just 11% of the growth in housing costs. This means that 89% of any price increases came from other factors. This could include housing supply constraints, investor speculation, or interprovincial migration.  

Further, investor speculation was a main contributing factor to the increase and eventual crash in the condo market. Real estate investors traditionally take advantage of lower prices on pre-sale condos (condos that are planned but not built yet) and wait for the value to increase over the three to five years it takes to finish the building. They then sell the unit or rent it out for a profit. 

Also, the Canadian Mortgage and Housing Corporation says the outlook for Canada’s housing market will stay weak from 2026 to 2028 due to: 

• High unemployment: Unemployment levels will stay elevated, limiting household spending. Canada currently has an average unemployment rate of 6.7% (rates vary by province).  
• Modest income growth: Slower income growth will reduce discretionary spending. The Bank of Canada says that we could be looking at a recession in the near future. 
• More cautious homeownership: Many households will delay buying new homes and choose to rent longer. Part of the reason is to do with mortgage rates. The rates for a fixed mortgage are high right now. Variable rates are lower but subject to market changes, making it a risk. 
• Mortgage renewals: Homeowners who got lower-rate mortgages during the pandemic will face higher rates when they renew. This will tighten budgets and encourage saving. 

Together, these factors reduce purchasing power and demand for homeownership. The report does also mention low population growth as a factor but doesn’t discuss it as a main concern. 

Rents Coming Down and People Staying Put 

These broader economic pressures are also influencing how people buy, sell, and invest in real estate—and their effects are becoming especially clear in the condo market. 

The vast majority of newcomers to Canada rent their first home/apartment/ condo while they start working and getting settled in their new community.  

We’ve seen rent prices drop over the past two years, which corresponds to reduced immigration level plans, but what we’ve also seen is a rise in new build condos.  

The Bank of Canada says that there were fewer starts on condo builds in 2025 than we’ve seen in years, but the market is still flooded with units. This is probably because during the high levels of immigration in 2022 and 2023, investing in condos was widely seen as profitable. The catch is that it takes a few years to build a new building and, in that time, things changed. 

Today, the market still has a high number of available units, likely due to the surge in condo development during the 2022–2023 period. According to an article in the Toronto Star, developers and owners looking to sell units are finding it so difficult that many are trying to rent them out rather than carry mortgages without a property generated income. Competition drives the prices down, and when it’s hard to save and rent is affordable, buying a house might not be the best option for many.  

This means, that in Canada’s big cities at least, the supply of condos and apartments is far outstripping demand, and both newcomers and Canadians can be more selective about where they live.  Many new high rises offer very small studios and one-bedroom condos, known as shoebox apartments. These units tend to be less desirable for many renters, particularly couples or those needing more space. 

The Toronto Star article also mentions that rent-controlled apartments are much more in-demand because no one wants to see their rent make a massive jump each year. These are typically found in older buildings. For example, in Toronto, there is no rent control in any unit built after 2018. 

Taken together, it all creates a ripple effect: when condo owners struggle to sell, it can slow activity across the housing market and put downward pressure on prices all around. 

The Bottom Line 

There is some truth to the idea immigration has played a visible role in shaping  Canada’s current housing market. Developers planned for continuous high levels of immigration and a continuous population increase, but IRCC’s sharp reduction of temporary and permanent resident admissions over the past two years have dramatically slowed that down.  

However, it isn’t the primary reason behind Canada’s housing price fluctuations. Broader economic conditions, investor behaviour, overbuilding in certain segments, and shifting buyer confidence are all having a far greater influence on the market. So, when IRCC loosely takes credit for easing the pressure on the Canadian housing market, it’s not necessarily true. 

As supply now begins to outpace demand—particularly in the condo sector—prices and rents are adjusting accordingly. Framing immigration as the main culprit for the rise and fall of home prices or rents is an oversimplification that covers up many of the other issues that have long influenced housing affordability in Canada.