Starting in 2025, Canada’s immigration policy is undergoing a huge shift: we’re expecting around 20% fewer permanent residents and nearly half a million fewer temporary residents over the next two years.
This means we’ll be moving from welcoming over a million newcomers annually to far fewer—a big change that could cause a slight population dip for the first time since the 1950s.
But what does this mean for real estate markets, especially in Toronto? Let’s break it down.
Economic Impact on Housing
Because immigration has been a huge factor in driving economic growth and demand for housing, Canada’s GDP could see slower growth—down from 2-3% to around 1% if projections hold.
The Bank of Canada, in turn, might respond to this cooling economy by cutting interest rates, which could affect both the rental and buying markets.
For renters, this population shift and rate cut would likely lower demand, putting more downward pressure on Toronto rents. We’re already seeing rents softening in Toronto, with leasing taking longer and demand from newcomers slowing down.
Since early 2024, rents have been trending downward, and this could accelerate with fewer newcomers.
Lower interest rates also mean that property investors won’t need to keep raising rents to cover high financing costs. Plus, a drop in rates can bring more investors back into the market, which increases rental supply, thanks to government programs that encourage the development of secondary suites and multiplexes.
This could give Toronto renters more choice and lower overall rental costs.
Is Now a Better Time for First-Time Buyers?
While the rental market is cooling, some positive news is emerging for potential buyers. Government programs are starting to offer first-time buyers more incentives like lower down payments and help with renovation costs.
Lower interest rates are also making monthly payments more affordable, which could make homeownership more attainable in Toronto.
Recent surveys show that buyers, especially first-time homeowners, are feeling a bit more optimistic about entering the market, which might support homebuying demand in the short-to-medium term.
For Investors: A Shift Back to Basics
Investors will feel these changes differently. Even with lower rates, we’re unlikely to see a big rush of investor interest. High rates have already slowed investor activity, and while a rate cut might boost attention, lower rents and slower appreciation will limit potential returns.
This could mean a shift in strategy, especially for those interested in Toronto condos, where appreciation has been the main goal.
For those staying in the market, the focus might be more on stable cash flow and building equity rather than quick gains. If you’re willing to put in the work to improve a property, there are still good opportunities to trade time for better returns, which might bring some stability back to the market.
Long-Term Market Stability
With all these changes, we can expect some bumps as the market adapts. Short-term impacts might feel chaotic, but over the long term, the real estate market could find a healthier balance.
Fewer speculative buyers and steadier demand could mean less volatility, making Toronto real estate a more stable, long-term investment.
How We Can Help
For real estate investors, there are still positive opportunities.
For instance, a two-unit bungalow in Toronto priced around $900,000 with about $30,000 in renovations could bring in around $1,000 monthly in cash flow after expenses.
This provides a solid cushion if rents soften further and is a good example of “back to basics” investing, where long-term growth and steady cash flow make up the foundation of a resilient investment.
Interested in real estate investing in Toronto? We’re not just another brokerage—we’re investors with hands-on experience. Our real estate sales brokerage specializes in multifamily properties, whether you’re looking for a ready-to-go multiplex or want to convert a single-family home.
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll support you through the whole process.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
What Toronto Real Estate Investment Is Right For You?
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