rennie landscape

DISRUPTION OF RENTAL HOUSING CONSUMPTION

The shift in Canadian immigration policy that we previously discussed doesn’t just have an uneven impact on the growth rates of cities in Canada—it also differentially impacts household tenure and, by extension, the ownership and rental segments of our market.

Overall, non-permanent residents (NPRs) consume less housing per-capita than Canadian-born residents and immigrants. (As a side note, immigrants consume more housing, on average, than their Canadian-born counterparts, in part because their children are often born in Canada.) So as we reduce the number of NPRs in Canada over the next two years, the net reduction in overall housing demand will be less than if the population decline had come from elsewhere.

Beyond the total reduction, however, is the tenure associated with NPRs. Eighty-nine percent of NPR households live in rented homes, compared with 32% for Canadian-born and 33% for immigrants. This is somewhat intuitive, as most people moving to a new country rent when they first arrive. NPRs with six months or less left on their permits are also subject to the foreign buyer ban, and in BC all NPRs are subject to the foreign buyer tax. So look for less additional rental housing demand over the next two years in Canada than there otherwise would have been, at a time when a glut of rental housing is set to be delivered, as we discuss in the next section.

LOWERED EXPECTATIONS

Last November, the federal government updated its immigration levels plan and, for the first time, set targets for the share of non-permanent residents in the Canadian population, aiming to reduce it from 7.4% to 5% by the end of 2026. Additionally, the target for permanent resident additions was lowered from the previous 500,000 in 2025 and 2026 to 395,000 in 2025, 380,000 in 2026, and 365,000 in 2027. We noted in the last rennie landscape that this will disproportionately impact Canada’s largest metro areas because this is where most of Canada's non-permanent residents live. This will also have implications for individual municipalities as they attempt to plan for growth and aim to ensure they're delivering housing and infrastructure to match.

To better understand how much these changes to immigration policy might impact our communities, we can lean on BC Stats' population forecasts and compare the current set of numbers (based on 2024 data) with last year’s version that assumed still-high international migration (based on 2023 data). Notably, of BC’s three largest metro areas, BC Stats is now forecasting population decline over the next two years in both  Greater Victoria and Kelowna, while expecting minimal, but still positive, population growth in Metro Vancouver.

Within Metro Vancouver, there are some notable differences between the current and previous forecasts. The City of Vancouver is now expected to experience significantly less population growth over the next decade than was previously anticipated, and despite having the largest population in the region, is now projected to add only the fourth-most number of people. The latest forecast now expects Surrey to surpass Vancouver in total population by 2027.

The relationship between population growth and housing demand is complex, and understanding how communities are growing is critical to delivering appropriate supply, which as we explore next, is different for different types of people.

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