Who Holds the Keys to Canada’s Housing Crisis?

By Mata Press Service

Two new federal reports have reignited the national debate over immigration and housing, with both offering different perspectives on what and who is driving Canada’s rental crisis.

The first, from the Canada Mortgage and Housing Corporation (CMHC), suggests that immigration and international student caps are already having an impact. In its Mid-Year Rental Market Update, released July 8, CMHC states: “In some centres, vacancy and availability rates are rising in newly built rental units, while rent growth is slowing.”

The agency points directly to recent federal decisions: “We believe that recent changes to immigration targets and a cap on the number of international students allowed in the country will cause rental demand to slow.”

In cities like Toronto, Calgary and Vancouver, CMHC notes that newly completed rental buildings are taking longer to fill, with landlords offering signing bonuses and free rent to attract tenants.

“Rent expectations over the next 12 months declined across most regions, particularly in new buildings,” the report states.

Despite these signs of cooling, affordability remains a major concern. In Vancouver, renters are spending 17.8 percent of their income on housing, while in Toronto, the number sits at 16.4 percent, according to the report.

But just weeks before CMHC’s findings, a separate federal study delivered a different conclusion.

The Immigration and Housing Prices report, published on June 20 by Immigration, Refugees and Citizenship Canada (IRCC) in collaboration with Statistics Canada, examined census data from 2006 to 2021.

It found that while immigration did contribute to rising rents and housing prices, its impact was modest compared to other drivers — especially in smaller cities and rural areas.

“Immigration explains roughly 11 per cent of the increase in housing prices and rents,” the study concluded.

For larger cities with over 100,000 residents, the impact was more pronounced — 21 percent of housing price growth and 13 percent of rent increases could be attributed to newcomers.

However, the researchers stressed that immigration is “just one of many factors” affecting affordability. The real issue, they say, is Canada’s chronic underbuilding: “In the long term, sustained increases in demand without commensurate increases in supply can lead to upward pressure on prices.”

This disconnect between short-term easing and long-term structural failure is now central to Canada’s immigration and housing policy — and to Prime Minister Mark Carney’s plan to align the two.

Since taking office earlier this year, Carney has positioned himself as a centrist reformer determined to make immigration “sustainable.” He plans to slow the pace of newcomers but not abandon Canada’s historic commitment to welcoming them.

In practical terms, that means:

• Reducing the number of temporary residents from about 6.2 per cent of the population to 5 per cent by 2027

• Keeping permanent resident admissions below 1 per cent of the total population, bringing levels down to 365,000 annually by 2027

• Capping international student visas and linking future approvals to a region’s available housing and job market

Carney has also promised stronger federal oversight of schools and employers that rely heavily on foreign talent. In a May mandate letter, he called for “returning overall immigration to sustainable levels” and “attracting top global talent to help build Canada’s economy.”

For many Canadians, the CMHC data may appear to justify these actions. After all, fewer newcomers mean less competition for housing and in some cases, lower rents.

But as the IRCC–StatsCan study makes clear, immigration has been only a part of the housing story, and not always the largest part.

The deeper problem is Canada’s consistent failure to build enough homes, fast enough, to keep up with demand. Immigration made that gap visible — it didn’t create it.

Both reports suggest that trying to manage housing affordability through immigration caps alone is shortsighted.

The CMHC data shows that even with fewer international students and slower population growth, affordability remains out of reach for many.

And the IRCC–StatsCan report warns that if supply doesn’t increase, any demand reduction will only offer short-lived relief.

In other words, without a surge in housing construction, policy changes that reduce immigration may weaken Canada’s long-term economic prospects without solving its affordability crisis.

The numbers reinforce that reality. Purpose-built rentals, even when vacant longer, still come at a premium. In many markets, new units rent for 25 to 40 per cent more than older stock, keeping them out of reach for many newcomers, especially those on student visas or working lower-wage jobs.

“Immigration didn’t cause the housing crisis… it exposed it,” said an immigration policy researcher.

“We’ve had decades of underbuilding, especially rental housing. Slowing immigration may ease demand in the short term, but it also weakens the workforce we need to build more homes…and cutting their numbers won’t fix it,” he said.

An affordable housing analyst in Vancouver said the CMHC report shows a slight cooling, but the big picture hasn’t changed.

Affordability is still terrible because we don’t have enough homes. Immigration caps won’t fix that. They might just make us feel like we’re doing something when we’re not,” he said.