1. The Big Picture: Immigration’s Historical Impact
A June 2025 study by Statistics Canada and Immigration, Refugees and Citizenship Canada found that new immigrants accounted for roughly 11% of the increase in both median house values and median rents across Canadian municipalities between 2006 and 2021—with notably stronger effects in large cities like those in Ontario.
In Ontario specifically, a 1% increase in new immigrants corresponded to a 0.034% rise in house values, underscoring the province’s sensitivity to immigration-driven demand.
2. Immigration Is No Longer a Tailwind—It’s Turning Into a Headwind
Recent forecasts signal a shift: RBC predicts that Canadian real estate prices will slip in 2026, with Ontario leading the declines. After a modest 0.7% national uptick in 2025, home prices are expected to fall by 0.7% in 2026—driven in part by diminished immigration and oversupply in hot markets like Ontario and B.C.
Further, RBC projects home resales to fall 3.5% in Canada in 2025, particularly in Ontario, though demand is expected to rebound somewhat in 2026—still, lower immigration and affordability constraints will dampen the recovery.
3. What’s Driving the Shift? Canada’s New Immigration Targets
The federal government has rolled out a major recalibration:
- Permanent resident admissions are being cut from a planned 500,000 down to 395,000 in 2025, 380,000 in 2026, and 365,000 in 2027.
- Caps on temporary resident volumes—such as international students and temporary workers—are also being introduced, targeting a reduction from 7.3% to less than 5% of the population by 2027.
These reductions aim to alleviate pressures on infrastructure and housing—but they also reduce domestic housing demand.
4. Ontario-Specific Impacts: Fewer Buyers and Labor Constraints
A. Demand Pressures
Fewer newcomers—especially permanent and temporary residents—mean less housing demand, particularly in entry-level and rental markets. This dynamic is expected to ease price growth or even send values downward in competitive segments like condos.
In Toronto, for instance, fallout from the surge-and-bust cycle has already triggered a C$150,000 median home price drop since early 2022, spurred partly by reduced immigration and investor retreat.
B. Construction & Housing Supply
Ontario is targeting 1.5 million new homes by 2031, but reduced immigration threatens the construction labour force—many skilled trades positions have historically been filled by newcomers. The shortfall may slow building efforts, potentially constraining improvement in affordability.
5. What SLG Home Buyers Should Know
Here’s how the landscape might play out:
| Trend | Implications for SLG Buyers |
|---|---|
| Slowing Price Growth | Opportunities may arise as price growth decelerates—especially in condos and starter homes. |
| Market Cooling | Less competition, fewer bidding wars—great for buyers eyeing affordability. |
| Construction Delays | Persistent supply constraints could limit future inventory—act strategically when inventory appears. |
| Rental Market Softening | Potential rent easing may make renting more appealing short-term for those weighing options. |
6. Final Thoughts
Ontario’s lower immigration is reshaping both demand (fewer buyers) and supply potential (labor shortages for development). The result: a cooler housing market, particularly in urban areas, with the potential for moderate price declines—especially in 2026. However, long-term affordability still hinges on improving housing supply, zoning reform, and workforce support.