Good Morning

📌 In Today’s issue:

• The scale and settlement patterns of immigration

• How immigration influences real estate demand: ownership vs rental

• Supply-side constraints and where the pressure points are

• Regional variation: how the impact differs across Canada

• Strategic take-aways for buyers, sellers and investors

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The scale and settlement of immigration

• Canada aims to admit about 395,000 new permanent residents in 2025, down from ~500,000 previously. The downward revision reflects public concern about housing, infrastructure and services.

• New immigrants disproportionately settle in large metropolitan regions — especially the Greater Toronto Area (GTA), Greater Vancouver, and Montreal driving concentrated demand in these markets.

• Immigrants tend to rent first, then move toward home-ownership over time. Statistics Canada data show that while new immigrants initially have lower home-ownership rates, their ownership rates rise over time.

Why this matters: Every newcomer needs housing. Whether they rent or buy, they add to demand. If supply doesn’t keep pace, that can translate into higher rents, tighter markets, and upward price pressure especially in popular settlement areas.

How immigration influences real estate demand

Ownership market

• A major 2023 Government of Canada research exercise found that between 2006-2021, the influx of new immigrants accounted for roughly 11% of the rise in median house values across Canada, on average; in large municipalities the estimate rises to ~21%.

• However, the study cautions that immigration is not the sole driver of house-price growth; other factors such as supply constraints, income growth, interest rates and local zoning matter a lot more.

Rental market

• Since many newcomers rent initially, immigration puts pressure on rental demand. In markets with tight vacancy, new inflows can push vacancy lower and rents higher. One report notes new immigrants are more likely than Canadian-born to rent (≈60% vs ≈20% in initial years). Aristotle Foundation

• If supply of rental apartments lags, this pressure can be acute, especially near transit hubs, universities, and high-growth suburbs.

Supply side constraints and pressure points

• One of the root issues: building housing supply (rental + ownership) has not kept pace with population growth. Immigration increases population faster than new housing units can be built in many regions. Fair Observer

• Econometric analysis shows that immigration’s impact on prices is significantly higher in markets where housing supply was less responsive (i.e., where permits/building lags). Bank of Canada

• Example: Ontario and B.C. are large recipients of immigrants and also have high house-price growth; by contrast, some Prairie markets with greater supply flexibility show a weaker correlation.

The takeaway: Immigration raises demand; whether it turns into price/rent growth depends heavily on how well the housing market can absorb that demand via supply expansion.

Regional variation: where immigration’s impact plays out differently

• GTA / Greater Vancouver: High settlement of newcomers + constrained supply mean pressure remains high. In these markets, immigration is a stronger correlate of price/rent increases.

• Secondary markets: Areas with fewer immigrants relative to supply may experience milder impact. For example, some smaller Ontario cities or Prairie provinces had weaker correlation between immigration growth and price increases.

• Rental vs Ownership dynamics: In high-immigration metros, rental vacancy may tighten first, raising pressure on rental market. Over time, home-ownership demand follows as immigrants settle.

Strategic take-aways for RealEdge readers

Buyers

• In high-immigration markets, entry into ownership may get more competitive. Factor in that newcomer demand supports baseline demand.

• If you’re buying in a lower-immigration or supply-balanced area, you might have more room to negotiate and less absolute competition.

• Focus on properties/locations near transit or where supply is constrained newcomers often prioritize those for convenience.

Sellers

• If you’re in a high-demand, immigrant-rich market, your asset benefits from underlying demand tailwinds. But remember: you’re also dealing with higher cost of capital, higher competition and affordability constraints.

• If you’re in a market where settlement is modest, you may need to rely more heavily on property condition, price attractiveness, and presentation rather than relying purely on macro demand.

Investors

• Consider rental properties in settlement-rich metros: new immigrants need rentals, so vacancy risk may be lower and absorption faster.

• However, factor in higher prices and higher competition. Evaluate investments in secondary or “next-ring” markets where immigrant demand is growing and supply is still reasonably tight.

• Build underwriting assumptions around steady rental demand from immigrant inflows, but not explosive appreciation unless your location is supply-constrained.

RealEdge bottom line

Immigration is a major demand driver in Canadian real estate, particularly in Canada’s biggest markets. But it does not operate in isolation. Supply, interest rates, local job growth, and zoning/regulation are equally powerful.

For you as a buyer, seller or investor, the smart move is to understand how your specific location aligns with these forces. In areas where immigration is strong and supply is constrained, you may benefit from underlying tailwinds but you’ll also face affordability and competition headwinds. In markets where settlement is lower and supply more responsive, you may find more negotiating room but fewer demand guarantees.

Want a 10-minute micro-brief on any of these markets (with comps and rent grids)? Book a quick strategy

See you next week