Canadian Immigration Changes To Impact BC & Ontario Real Estate Most: BMO

Canadian immigration policy will seek to slow population growth, but the impact will vary by province. In a new BMO Capital Markets research note, the bank explains regions with the highest number of temporary residents will be impacted most. As a result, that means shelter costs in BC and Ontario will see the most immediate impact from slower population growth. Regions less dependent on temporary residents are expected to have a near-term buffer, but it’s too early to dismiss a knock-on effect.

BC & Ontario To See The Biggest Impact From Immigration Changes

Canada reversed course on its population growth plan and will now try to shrink its population. This plan primarily involves tapering the number of temporary residents (TRs) in the country, such as those visiting on a study permit. Provinces with the largest inflow of TRs relative to the local populations will see the biggest impact. 

“Immigration target changes are likely to weigh heavier in British Columbia and Ontario over the coming three years,” explains BMO senior economist Robert Kavcic.  

Adding, “Perhaps not surprisingly, B.C. (9.3%) and Ontario (8.5%) had the most temporary residents as a share of the population in 2024 Q3, well above the announced 5% national target.” 

Kavcic also notes the explosion in another segment of TRs—temporary foreign workers (TFWs). Canada recently announced it would stop processing low-wage stream TFWs, and the process for issuing visas is also expected to tighten. As a result, he sees provinces with heavy concentrations relative to total population also seeing an impact. 

“For temporary foreign workers specifically (who carry more weight than students), B.C. currently holds the largest share by a wide margin at 4.8%.” he explains.  

Canadian Real Estate Prices To See Downward Pressure, Especially BC & Ontario

Not all Canadian provinces saw a population explosion related to a surge in TRs. Not entirely, at least. Those provinces are expected to see a much more tepid shift from the new policy changes. 

“At the other end of the spectrum, parts of Atlantic Canada and Alberta have relatively low temporary resident shares and should see a more muted impact. These regions are also drawing in interprovincial migration flows as an added buffer,” explains Kavcic. 

Worth mentioning those provinces may not have seen a direct impact, but they may see an impact. Interprovincial migration was largely driven by affordability issues, especially when it comes to a crucial demographic—young adults. They largely fled from regions like BC and Ontario, two provinces the bank expects shelter costs to moderate over the next few years. 

“Suffice it to say that rental markets in Ontario and B.C., which have a pipeline of supply coming to market, will also likely see their demand curves impacted most. Watch for that to play out in lower rent (immediately) and cooling housing starts (eventually),” notes Kavcic. 

Home prices in Atlantic Canada have also seen considerable growth since interprovincial migrations picked up. Many cities in those regions have seen shelter costs rise at a much faster pace than traditional major real estate markets. As a result, the spread between the expensive cities young adults fled to is narrowing, providing less incentive than it once did. Buyer psychology can shift dramatically, and slow interprovincial migration if the regions they’re fleeing pick up.