Canada Immigration Policy Shift Cools Rent, Stabilizes Jobs

How Canada’s New Immigration Policies Are Slowing Rent Increases and Stabilizing Jobs

Canada’s evolving immigration policies are having a noticeable impact on the economy — and for once, it’s not all about numbers on paper. A new TD Economics report suggests the federal government’s move to scale back immigration is already easing pressure on housing markets and helping to stabilize employment. And while many expected a dip in consumer spending due to fewer newcomers, household expenditures have remained surprisingly resilient.

Let’s break down what these changes mean for renters, workers, and the future of Canada’s population outlook.

Key Highlights

• Rental price growth is slowing, especially in urban centres like Toronto and Vancouver.
• Unemployment has stabilized, avoiding a steeper increase thanks to fewer new workers.
• Household spending remains strong, despite slower population growth.
• The drop in temporary residents is largely due to federal policy changes introduced in 2024–2025.
• Canada’s population growth flatlined in the first half of 2025, largely from fewer international students and workers.
• Over 300,000 fewer work and study permits are expected to be issued by 2027 due to policy changes.

What’s Behind Canada’s Slower Immigration Growth?

In an effort to manage housing affordability and job market stability, the Canadian government introduced a series of immigration policy changes from 2024 into 2025. These included:

• Limiting eligibility for the Post-Graduation Work Permit (PGWP) to students in advanced degree programs or specific fields.
• Introducing language requirements for PGWP applicants.
• Reducing access to spousal open work permits (SOWPs) for international students and temporary foreign workers.
• Placing a moratorium on low-wage Labour Market Impact Assessments (LMIAs) in high-unemployment regions.
• Raising wage thresholds for high-wage Temporary Foreign Worker Program (TFWP) streams.

All these efforts aim to reduce the number of temporary residents in Canada. And it’s working — data from Immigration, Refugees and Citizenship Canada (IRCC) shows a 59.7% drop in new international student arrivals and a 48.6% decrease in new worker arrivals in 2025 compared to the year before.

Rental Prices Are Cooling — Especially in High-Immigration Cities

One of the clearest effects of slowed immigration is in rental housing. According to TD Economics, the average annual increase in purpose-built rental prices between 2025 and 2027 is now expected to be 3.5%. If immigration rates had stayed on their previous trajectory, that figure could have jumped to 5.5% — meaning renters would have been paying around $1,100 more per year for a one-bedroom apartment by 2027.

This relief is most visible in provinces with high concentrations of temporary residents, like Ontario and British Columbia. Cities like Toronto and Vancouver, which have long struggled with affordability, are finally seeing a bit of breathing room in their rental markets.

That said, immigration isn’t the only factor at play. The TD report also points to lower interest rates and more supportive rental construction policies as contributing to easing demand pressures.

Unemployment Holds Steady Thanks to Fewer Incoming Workers

Labour market trends are also showing signs that the immigration slowdown has had a stabilizing effect. Canada’s unemployment rate sat at 7.1% as of September 2025. Not ideal — but TD’s economic models suggest that without the reduction in new arrivals, that rate could have climbed past 8%.

Between July and September 2025, an estimated 40,000 net jobs were lost, and another 40,000 are considered at risk. But the smaller inflow of workers helped cap the rise in unemployment, particularly in sectors that are sensitive to sudden labour surges.

The takeaway? While Canada’s job market has cooled, it could have been worse without these recent immigration adjustments.

Surprising Resilience in Household Spending

Perhaps the most unexpected finding in the TD Economics report is that household spending hasn’t dipped, even with fewer new residents. In fact, aggregate spending in the first half of 2025 outperformed forecasts.

What’s behind this resilience? A few things:

• Lower interest rates have made borrowing more affordable.
• Many households have been drawing on savings accumulated during the pandemic.
• Domestic tourism and housing demand have both rebounded.

Another factor: the makeup of Canada’s newcomer population between 2022 and 2024 included many individuals — such as international students and lower-wage workers — with less discretionary income. So as their share of population growth declines, the overall impact on consumer spending may be more muted than expected.

Real per capita spending is now trending upward after almost two years of decline and is projected to surpass its mid-2022 peak sometime in 2026 — earlier than it would have if immigration had continued at previous levels.

Canada’s Population Growth Has Flatlined, But Not Its Economy

Statistics Canada data shows that population growth hit 0.0% in Q1 2025 and barely nudged to 0.1% in Q2. That’s a significant drop in a country where immigration typically fuels much of the population increase.

As of July 1, 2025, temporary residents made up 7.3% of Canada’s population — down from 7.6% just a few months earlier. This decline is mostly due to fewer new arrivals and many individuals either leaving the country or transitioning to permanent residency.

Even as growth slows, however, the economy hasn’t stumbled. In fact, Canada’s approach may be striking a better balance between welcoming newcomers and maintaining affordability and employment stability for current residents.

Looking Ahead: What This Means for Immigration Planning

With reduced rent inflation and a more stable job market, Canada’s more moderate immigration targets may be having their desired effect. The upcoming Immigration Levels Plan (2026–2028) is expected to continue this cautious approach — reflecting an effort to manage growth in a way that supports affordability and economic resilience.

For those looking to immigrate permanently, options like the Manitoba PNP or other Provincial Nominee Programs may become even more important as temporary pathways narrow.

Final Thoughts

Whether you’re a renter breathing a sigh of relief, a job seeker watching the market carefully, or a newcomer planning your future in Canada — these policy shifts are worth paying attention to. While reducing immigration comes with trade-offs, the latest data suggests Canada might be finding a more sustainable path forward.

Curious how these changes could affect your immigration plans? Be sure to check out our guide to the latest provincial nominee programs or contact an expert for tailored advice.