Here’s How Much Immigration Contributed To Canada’s Housing Crisis

Last Updated On 21 July 2025, 9:19 AM EDT (Toronto Time)

Canada’s housing market has been under intense scrutiny in recent years, with skyrocketing prices and dwindling affordability sparking heated debates.

One question looms large: how much has immigration contributed to this housing crisis?

A groundbreaking study conducted by Immigration, Refugees, and Citizenship Canada and Statistics Canada, published in June 2025, dives deep into this issue.

Using municipal-level data, the study uncovers the nuanced relationship between immigration and housing costs, revealing that immigration accounted only for approximately 11% of the rise in median house values and rents across Canadian municipalities.

Explore the study’s findings, offering a fresh perspective on how immigration intersects with Canada’s housing challenges and why the impact varies by region and time.

The Housing Crisis and Immigration Debate in Canada

Canada is known for its welcoming immigration policies, attracting thousands of newcomers annually.

However, with rapid population growth comes increased demand for housing, particularly in urban centres where immigrants often settle.

This dynamic has fueled speculation about immigration’s role in driving up housing costs.

The study, led by researchers Feng Hou, Évamé Koumaglo, and Haozhen Zhang, tackles this complex issue head-on, using robust data and advanced econometric methods to provide clarity.

The research highlights that while immigration does contribute to rising housing prices, it is not the sole driver.

Factors like supply constraints, low interest rates, and speculative investments also play significant roles, but always immigration and immigrants are used as scapegoats.

Interestingly, the study notes that immigrants can help alleviate housing shortages by filling labour gaps in the construction industry, yet rapid influxes of newcomers can strain existing housing stock, especially in cities with limited supply.

Understanding the Study’s Approach

The study leverages municipal-level panel data from the 2006, 2011, 2016, and 2021 Canadian censuses, focusing on changes in median house values for owner-occupied homes and median monthly rents.

Unlike previous research, which often examined immigration inflows at a single point in time, this study analyzes changes in the number of new immigrants (those who arrived within the past five years) over time.

This approach captures the dynamic impact of immigration on housing markets.

To ensure accuracy, the researchers employed a first-difference fixed-effects instrumental variable (FE-IV) model, a sophisticated method that addresses issues like omitted variables and endogeneity.

This model accounts for unmeasured municipality-specific factors and the tendency of immigrants to settle in economically vibrant areas, which could skew results.

The analysis covers 1,939 to 1,949 municipalities with populations over 1,000, providing a comprehensive view of Canada’s housing landscape.

Key Findings: Immigration’s Impact on Housing Prices

The study reveals that, from 2006 to 2021, the influx of new immigrants accounted for approximately 11% of the increase in both median house values and median monthly rents across municipalities with populations over 1,000.

This figure comes from the FE-IV model, which provides a more robust estimate than the simpler fixed-effects (FE) model.

In the FE model, a 1% increase in the number of new immigrants was associated with a 0.032% rise in house values and a 0.011% rise in rents.

The FE-IV model, however, estimates a stronger effect: a 1% increase in new immigrants corresponds to a 0.143% rise in house values and a 0.045% rise in rents.

To put this in perspective, over the study period, the average five-year increase in house values was 18.5% (0.170 log points), while the number of new immigrants grew by 13.1% (0.131 log points).

This means immigration contributed 2.5% (FE model) to 11% (FE-IV model) to the overall rise in house values.

For rents, the average five-year increase was 5.2% (0.052 log points), with immigration accounting for 2.8% (FE model) to 11.3% (FE-IV model) of the increase.

Impact in Large Municipalities

The effect of immigration on housing costs is significantly stronger in larger municipalities.

In the 53 municipalities with populations over 100,000, which host about 82% of new immigrants, the rise in new immigrants accounted for 21% of the increase in median house values and 13% of the increase in median rents.

Specifically:

A 1% increase in new immigrants was associated with a 0.376% (FE model) to 0.419% (FE-IV model) rise in house values. For rents, a 1% increase in new immigrants led to a 0.077% (FE model) to 0.086% (FE-IV model) rise.

This disparity highlights the concentrated settlement patterns of immigrants in urban centres like Toronto, Vancouver, and Montreal, where housing demand is already high.

Regional and Temporal Variations

The study underscores that immigration’s impact on housing prices varies by region and time period.

In provinces like Ontario, British Columbia, and Quebec, which attract the most immigrants, there was a statistically significant positive correlation between immigration growth and housing prices.

For example:

In Ontario, a 1% increase in new immigrants was linked to a 0.034% rise in house values and a 0.015% rise in rents (weighted FE model). In British Columbia, the figures were 0.025% for house values and 0.023% for rents. In Quebec, a 0.010% increase was observed for house values.

In contrast, provinces like Alberta and the Atlantic provinces showed no significant correlation, reflecting differences in economic conditions and housing supply.

The temporal analysis reveals fluctuations:

2006–2011: Strong positive correlations, with new immigrant growth aligning with rising house values in Prairie provinces and Quebec. 2011–2016: A negative correlation, as Ontario saw significant house price increases but fewer new immigrants, while Saskatchewan and Alberta had more immigrants but stable prices. 2016–2021: Positive correlations returned, driven by immigrant growth in Ontario and British Columbia, where house prices surged.

These variations suggest that immigration’s impact is heavily influenced by local economic conditions, housing policies, and supply constraints.

Data Insights: Correlations and Trends

Correlation Analysis

The study’s correlation analysis (Table 1) shows how changes in housing prices relate to new immigrant growth across different periods:

Table 1: Simple Correlation Between Changes in Housing Prices and New Immigrants (2006–2021)

PeriodChange in Log Median House ValuesChange in Log Median Rents2006–20110.267***0.204***2011–2016-0.122***0.047*2016–20210.278***0.159***Pooled (2006–2021)0.163***0.145***

*Note: ***p < 0.001, *p < 0.05. Data from 1,939–1,949 municipalities with populations ≥ 1,000.*

The positive correlations in 2006–2011 and 2016–2021 indicate that municipalities with larger immigrant influxes experienced greater housing price increases.

The negative correlation in 2011–2016 reflects regional mismatches, such as Ontario’s price surges despite lower immigration.

Municipal-Level Trends

Table 2 highlights changes in new immigrant numbers, house values, and rents in municipalities with populations over 100,000:

Table 2: Changes in New Immigrants, House Values, and Rents (Log Points)

Municipality2006–20112011–20162016–2021SaskatoonImmigrants: 1.211, House: 0.544, Rent: 0.263Immigrants: 0.527, House: 0.010, Rent: 0.079Immigrants: -0.034, House: -0.010, Rent: -0.026ReginaImmigrants: 1.131, House: 0.608, Rent: 0.254Immigrants: 0.730, House: 0.042, Rent: 0.133Immigrants: -0.040, House: -0.079, Rent: -0.072OshawaImmigrants: -0.012, House: 0.002, Rent: -0.099Immigrants: 0.290, House: 0.350, Rent: 0.059Immigrants: 0.971, House: 0.559, Rent: 0.168TorontoImmigrants: -0.185, House: 0.048, Rent: -0.085Immigrants: -0.147, House: 0.322, Rent: 0.091Immigrants: 0.023, House: 0.327, Rent: 0.149

This table illustrates regional disparities, such as Saskatoon’s rapid immigrant and price growth in 2006–2011, contrasted with Toronto’s modest immigrant growth but significant price increases in 2016–2021.

Why Immigration Isn’t the Sole Culprit

While immigration contributes to housing price increases, the study emphasizes that it’s not the only factor.

Supply constraints, such as zoning restrictions and high construction costs, limit new housing development.

Low interest rates and speculative investments have also driven demand, particularly in urban centres.

Additionally, immigrants often settle in economically vibrant areas, where housing prices are already rising due to strong job markets and amenities.

The study also highlights immigration’s positive contributions.

Newcomers, including skilled workers like construction professionals, help address labour shortages, facilitating homebuilding.

However, in the short term, rapid population growth can outpace housing supply, especially in cities with inelastic supply.

The findings suggest that policymakers must consider both spatial and temporal dimensions when addressing immigration’s impact on housing.

In large municipalities, where immigration’s effect is most pronounced, strategies like increasing housing supply through relaxed zoning laws or incentivizing construction could mitigate price pressures.

Rent control policies, which dampen rent increases in some provinces, may also explain why immigration’s impact on rents is less severe than on house values.

Regionally tailored policies are crucial.

In Ontario and British Columbia, where immigration strongly correlates with price increases, targeted investments in affordable housing could help.

In contrast, provinces like Alberta, with weaker correlations, may benefit from focusing on economic growth to attract immigrants without exacerbating housing costs.

Canada’s housing crisis is a multifaceted issue, with immigration playing a significant but not dominant role.

The 2006–2021 study shows that new immigrants contributed to 11% of the rise in house values and rents nationally, with a stronger impact (21% for house values, 13% for rents) in large municipalities.

By understanding these dynamics, Canada can craft policies that balance immigration’s benefits with the need for affordable housing, ensuring a sustainable future for all residents.

For more such updates on Canada’s housing crisis and immigration, stay updated on Immigration News Canada

I am Vanshika, very much an enthusiastic human and writer. I am mostly found chasing the latest buzz, one story at a time, turning chaos into compelling narratives in the fast-paced world of deadlines. From bizarre local legends to global headlines, I write it all.

by Purnima Mann 19 July 2025, 9:56 AM EDT19 July 2025, 9:56 AM EDT by Vanshika 18 July 2025, 9:38 AM EDT18 July 2025, 9:38 AM EDT by Vanshika 17 July 2025, 5:47 PM EDT18 July 2025, 4:05 PM EDT Load More Post

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