Canada's decision to sharply reduce migration levels has led to a notable decline in housing costs, according to experts. The Canadian government under former prime minister Justin Trudeau introduced caps on temporary residents and international students in late 2024, aiming to alleviate pressure on housing and public services. This marked a significant shift for a country traditionally open to immigration.
Data from Rentals.ca shows that average asking rents have fallen year-on-year for 17 consecutive months nationally. While home price declines have been more subdued, apartment values in some major cities have dropped by as much as a third, largely due to reduced demand from foreign students. The population has now shrunk for the first time since the 1940s.
Steve Pomeroy, a housing expert at McMaster University, noted that the post-2021 surge in temporary migrants overwhelmed the rental market. He calculated that the spike required 490,000 new homes annually, triple the level needed before the pandemic. The construction industry typically takes three to five years to respond to such demand shifts.
However, the policy has had negative consequences. Universities, reliant on foreign student fees, have closed programs, and industries like care are facing labour shortages. Carolyn Whitzman of the University of Toronto cautioned that the migration cuts have not solved Canada's chronic housing unaffordability, with rents only dropping 3-5% after huge prior increases.
Despite these challenges, Pomeroy believes the overall impact on housing affordability has been positive. The experience offers lessons for other countries, such as Australia, facing similar pressures from rapid population growth and housing shortages.
