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Canada's population growth is slowing significantly, with the highest exodus of non-permanent residents (NPRs) recorded since 2021. This trend has begun to cool Canada’s overheated rental markets, with rental rates softening as demand from NPRs diminishes. The federal government’s recent population management strategy, which includes lowering immigration targets and addressing temporary residents, signals a shift toward controlling housing demand, particularly in urban centers where NPRs traditionally drive rental inflation.

The government plans to gradually reduce permanent resident targets from 500,000 in 2024 to 365,000 by 2027, aiming to alleviate pressure on the housing market. Temporary residents, including international students and foreign workers, remain a key focus, as their clustering in cities like Toronto, Vancouver, and Montréal has historically fueled rental competition. Their record departures are cooling rental inflation, with reports showing significant stabilization in rent growth compared to previous years, particularly in major cities like Toronto.

However, this shift brings new challenges. Urban rental markets, once reliant on NPR demand, face potential stagnation, even as rental supply grows to record levels. Landlords are feeling the pressure of high borrowing costs and reduced cash flow, prompting some to sell or convert properties to owner-occupied units. While tenants benefit from stabilized rents, questions remain about the broader implications for Canada’s housing market as population-driven demand declines.

Read the full article on: REAL ESTATE MAGAZINE