Impact of the 2025-2027 Immigration Levels Plan on Canada’s Housing Gap

This note presents the Parliamentary Budget Officer’s (PBO) estimate of the impact of the Government’s 2025-2027 Immigration Levels Plan on the housing gap in Canada.

Key findings

• Assuming that the population evolves in line with the Government’s projection, we estimate that the 2025-2027 Immigration Levels Plan will reduce Canada’s housing gap in 2030 by 534,000 units (45 per cent). After accounting for the Government’s new immigration plan, we estimate Canada’s housing gap in 2030 to be 658,000 units.
• Combined with our updated baseline outlook of 1.7 million net housing completions, closing the housing gap in Canada would require a total of 2.3 million housing completions by 2030, which would translate into 390,000 total units completed annually, on average, over 2025 to 2030.
• We judge that there is significant risk to the demographic projection presented in the Government’s new immigration plan—particularly to the projected outflow of non-permanent residents. Our estimated reductions in household formation and the housing gap are uncertain and likely represent upper-bound estimates.

On October 24, the Government released its 2025-2027 Immigration Levels Plan (ILP), which included permanent resident targets and, for the first time, temporary resident targets for international students and temporary foreign workers. For permanent residents, the plan highlights a decrease in permanent resident admissions from 464,265 in 2024 to 395,000 in 2025, 380,000 in 2026 and 365,000 in 2027. For non-permanent residents (NPRs), the plan presents arrival targets set with the goal of reducing the number of NPRs to 5 per cent of Canada’s population by the end of 2026.

Given the immigration targets announced in this plan, the Government projects that the Canadian population will decline by 0.2 per cent in both 2025 and 2026, before returning to population growth of 0.8 per cent in 2027. If the population evolves as the Government projects, it will be the first time Canada experiences an annual decline in its population. Although the ILP projects fewer permanent resident admissions and fewer NPR arrivals, the projected decline in the population will be driven by large outflows of NPRs. Excluding individuals who will transition to permanent residency, the plan assumes that 2.8 million temporary residents will leave the country over the next 3 years—equivalent to 93 per cent of the current NPR population.

To estimate the impact of the Government’s new immigration plan on the housing gap, PBO first updated its estimate of the housing gap[^1] from the April 2024 report Household Formation and the Housing Stock to include population and housing completion estimates for 2024, as well as an updated baseline outlook for net housing completions following the announcement of Canada’s Housing Plan. Next, we estimated what the housing gap in 2030 would be given the new population projections under the 2025-2027 ILP. The difference between the two housing gap estimates represents the impact of the Government’s new immigration plan.

In terms of household formation, we estimate that the demographic projection presented in the new Immigration Levels Plan would result in 497,000 fewer households in 2030—well below the lower population growth scenario in our April 2024 report (assuming all those whose NPR status will be revoked will leave Canada).

Statistics Canada

Office of the Parliamentary Budget Officer

Statistics Canada

Office of the Parliamentary Budget Officer

The projection period covers 2025 to 2030. Estimates over 2022 to 2024, as well as projections over 2025 to 2030, reflect only the demographic demand for housing.

Our outlook for housing construction has also been revised upward to reflect recent data and the potential impacts of the Government’s new housing measures. As such, we assume that over 2025 to 2030, the housing stock will increase on average by 280,000 units annually. This matches the higher construction scenario considered in our April 2024 report.

Statistics Canada

Office of the Parliamentary Budget Officer

Statistics Canada

Office of the Parliamentary Budget Officer

The projection period covers 2025 to 2030.

In the absence of the 2025-2027 ILP, relative to our updated outlook for housing construction, we estimate that 1.2 million additional units—199,000 units annually, on average, over 2025 to 2030—would need to be completed by 2030 to eliminate the housing gap in Canada. Assuming that the population evolves in line with the Government’s plan, we estimate that the 2025-2027 ILP will reduce Canada’s housing gap in 2030 by 534,000 units (45 per cent).[^2] After accounting for the new ILP, we estimate Canada’s housing gap in 2030 to be 658,000 units (Table 2). Eliminating this gap would require an additional 110,000 units constructed annually over 2025 to 2030 relative to our updated outlook.

Combined with our updated baseline outlook of 1.7 million net housing completions, closing the housing gap in Canada would require a total of 2.3 million housing completions by 2030, which would translate into 390,000 total units completed annually, on average, over 2025 to 2030.

That said, we judge that there is significant risk to the demographic projection presented in the Government’s 2025-2027 Immigration Levels Plan—particularly to the projected outflow of non-permanent residents. Both our estimated reduction in household formation and the housing gap under the ILP are uncertain and likely represent upper-bound estimates.