Canada’s 2026-2028 Immigration Plan: Balancing Newcomers and Housing Needs

Canada’s Immigration Levels Plan: Balancing Admissions and Housing Pressures

Canada’s 2026-2028 Immigration Levels Plan aims to manage the nation’s growth by setting specific targets for permanent and temporary resident admissions. The plan, announced in September 2026, keeps permanent resident numbers steady at 380,000 annually for 2026, 2027, and 2028. However, it significantly reduces the number of temporary resident arrivals, with targets falling from 385,000 in 2026 to 370,000 in both 2027 and 2028. A key objective is to bring the temporary resident population to below 5% of Canada’s total population by the end of 2027.

This shift in immigration policy is intended to ease pressure on housing, infrastructure, and public services. While some cities have seen a softening in rental prices, the impact on the housing market is complex, with construction activity showing signs of slowing rather than accelerating. Understanding these dynamics is crucial for assessing the plan’s effectiveness and its broader implications for Canada’s future.

Permanent Resident Admissions Remain Steady

The 2026-2028 Immigration Levels Plan maintains a consistent target for permanent resident admissions, holding steady at 380,000 per year across the three-year period. This commitment to a stable inflow of permanent residents suggests a continued focus on long-term population growth and economic contributions. These individuals are expected to integrate into Canadian society and contribute to the workforce and economy over the long term.

This steady approach to permanent immigration contrasts with the planned reductions in temporary resident numbers. It indicates a strategic decision to prioritize those seeking to establish long-term residency and citizenship, while moderating the influx of temporary workers, students, and visitors. This balance is a core element of the government’s strategy to manage national growth.

Temporary Resident Targets See a Decline

A significant aspect of the new immigration plan is the reduction in temporary resident admissions. The target for temporary residents is set at 385,000 for 2026, followed by a decrease to 370,000 for both 2027 and 2028. This represents a notable decrease compared to previous years, with the government citing concerns about the strain on housing, infrastructure, and essential services.

The international student population, a major component of temporary residents, has already seen a decline of about one-third since 2024. This reduction in temporary arrivals is expected to lessen demand in areas with high concentrations of students and temporary workers, potentially impacting rental markets and local services. The government’s goal is to achieve a more controlled pace of population growth.

Impact on Housing Affordability and Rental Markets

The reduction in temporary resident numbers, particularly international students, is anticipated to have an effect on housing affordability and rental markets. Data from September 2026 indicated that the average asking rent for a two-bedroom apartment across Canada had slightly decreased by 0.9% year over year, reaching $2,150 in the first quarter of 2026. Some major cities, like Vancouver, experienced more pronounced drops, with rents falling by 2.2% annually.

However, the impact is not uniform. While rents have softened in cities like Toronto and Vancouver, smaller and more affordable cities have seen stronger rent growth. Economists suggest that lower immigration rates contribute to reduced demand in housing markets, which can lead to lower asking rents. This demand-side effect is a key consideration in the government’s strategy to alleviate housing pressures.

Construction Activity and Housing Supply

Despite some easing in rental demand, Canada’s housing construction sector has not seen a broad rebound. Figures from the Canada Mortgage and Housing Corporation (CMHC) showed a decline in housing starts in July 2026, with the national seasonally adjusted annual rate falling by 5% from the previous month. The six-month trend also indicated a slight decrease.

Forecasts for 2026 suggest a softer year for construction starts compared to 2025. This trend is important because while reduced demand can lower immediate rental costs, a slowdown in new construction can limit the future supply of housing. This creates a complex scenario where immediate rental relief might not translate into a long-term increase in housing availability.

Mortgage Costs and Future Outlook

Financing conditions continue to play a significant role in the housing market calculation. Projections for average posted five-year fixed mortgage rates indicate a gradual increase from 5.2% in 2026 to 5.5% by 2028. These mortgage costs influence both potential homebuyers and renters, affecting affordability and market dynamics.

The combination of softening rents in some urban centers and projected declines in housing starts for 2026 presents a mixed outlook for the housing market. Developers face borrowing costs, while households grapple with mortgage payments and rental expenses. The federal government’s immigration targets are designed to address these pressures, aiming for a balance between population growth and the capacity of housing and infrastructure. The temporary resident target is set to remain at 370,000 in 2028, with the overarching goal of reducing the temporary resident population to 5% of Canada’s total population by the end of 2027.

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