Canada is experiencing a housing crisis unlike anything in its modern history. But for savvy international investors, this crisis represents one of the most compelling real estate investment opportunities available today. Here's why the perfect storm of immigration demand and supply constraints makes Canadian multifamily properties an essential portfolio holding.

Canada welcomed nearly twice as many permanent residents in 2025 as it did in 2015, with immigration targets reaching 500,000 permanent residents annually. But here's the critical insight: temporary and permanent immigration accounted for almost 98% of Canada's population growth in 2023.

This unprecedented population surge created a historic mismatch between demand and supply:

• Population Growth: Canada's population grew by a record 1.23 million new residents in 2023, more than double the pre-pandemic record set in 2019

• Housing Construction: Construction began on about 245,367 new housing units in 2024, down from a recent high of 271,198 starts in 2021

• Supply Gap: Canada added 3.9 new residents per housing start in 2024, far higher than at any point prior to the COVID-19 pandemic

Here's what makes this opportunity particularly compelling for rental property investors: newer immigrants are much more likely to rent (about 60 percent) compared to Canadian-born citizens and long-term immigrants (about 20 percent were renters).

The Bank of Canada noted that "Strong population growth in recent years has boosted demand for housing... The increase in housing demand from newcomers is being felt across all types of housing, but the largest initial impact tends to be in rental markets".

Current Rental Market Conditions:

• Average one-bedroom rental rates in Vancouver and Toronto were $2,530 and $2,360, respectively, while two-bedroom units were $3,430 and $3,077 in those cities as of January 2025

• The average cross-country rental rate in December 2024 was $2,109, still over $300 higher than the $1,805 recorded in December 2019

Despite record demand, Canada faces a construction capacity crisis that ensures sustained rental demand:

Canada needs an estimated 390,000 new units annually by 2030 to eliminate the housing gap, but current construction levels fall dramatically short. Even with relatively high levels of construction, the main concern is struggling to keep pace with increased demand due to growing population, with TD Economics estimating Canada could be short over 300,000 housing units from 2024-2026.

As of February 2024, it took 22 months to finish a construction project in Canada, with construction timelines lengthening across all types of homes. This extended timeline means supply responses lag demand by years, not months.

The construction industry faces persistent challenges:

• Labour shortages and supply chain disruptions continue despite industry resilience

• The Building Construction Price Index for apartments rose by 4% in the first half of 2024, with Toronto seeing the index growth slow from 15% to 5%

The federal government explicitly acknowledges the immigration-housing connection. Federal public servants warned two years ago that "Rapid increases put pressure on health care and affordable housing", and immigrants account for 23% of all general contractors and residential builders, playing a vital role in addressing the housing shortage.

Recent policy adjustments show government awareness but limited immediate impact:

• Canada lowered its 2025 permanent resident target to 395,000 from 500,000, with temporary residents capped to reduce from 7.3% to 5% of population by 2027

• In the first nine months of 2024, international students coming to Canada were down 43% compared with 2023, resulting in rental price decreases of over 10% in Vancouver and 8% in Toronto for some unit types

However, the Parliamentary Budget Office estimates that even with immigration reductions, Canada's housing gap in 2030 will still be 658,000 units.

The data shows multifamily rental properties are particularly well-positioned:

Apartment construction is mainly supported by the rental market, proving more resilient than the condominium market which is in strong decline, with sustained demand from increased migration and various government measures.

Key Multifamily Trends:

• A resurgence in purpose-built rental construction supported by skyrocketing rental prices and government programs, such as the federal government's decision to remove the GST on purpose-built rental construction

• Long term fundamentals continue to support low vacancy rates in affordable rental segments, with minimal impact expected to vacancy rates for the most in-demand rental units such as those with rent controls

• Housing supply shortages will encourage more multi-unit starts, though reduced migration will provide some moderation in 2025

This crisis creates a compelling investment thesis for international investors:

1. Sustained Demand: Even with immigration reductions, Canada still faces structural housing shortages and pent-up demand

2. Supply Constraints: Construction timelines and costs ensure supply responses lag demand significantly

3. Rental Focus: Renting continues to be the more affordable housing option for many Canadians, coupled with rapid population growth creating substantial pent-up demand for rental housing

4. Government Support: Policy measures support purpose-built rental construction while immigration remains essential for economic growth

The housing crisis isn't uniform across Canada. A recent study found that immigration's effect on housing costs was stronger in larger cities and in provinces like Ontario, Quebec, and British Columbia, where most newcomers settle and housing supply is most limited.

Key Metropolitan Areas:

• Toronto: Housing starts projected to range from 35,000-42,000 annually through 2026, well below demand levels, with existing home sales in 2024 well below the 10-year average

• Vancouver: Continues to face supply constraints with rental market adjustments

• Calgary: Showing strong housing start numbers with 38% increase in units started in the first half of 2024, though vacancy rates forecast at just 1.1% in 2024 and 1% in 2025

Canada's immigration-driven housing crisis isn't a temporary phenomenon—it's a structural shift that creates lasting investment opportunities. CMHC calls for around 430,000 to 480,000 new homes annually by 2035 to restore affordability, indicating the supply-demand imbalance will persist for years.

For international investors seeking stable, income-producing assets with appreciation potential, Canadian multifamily real estate offers:

• Sustained rental demand from immigration-driven population growth

• Supply constraints that protect against oversupply

• Government policies supporting purpose-built rental construction

• Currency diversification benefits for international portfolios

• Opportunities across the socio-economic fabric, from simple to luxury buildings available

The immigration-driven housing crisis represents more than a challenge—it's a generational investment opportunity in one of the world's most stable real estate markets.

This content is for educational purposes only and does not constitute investment advice. All investments involve risk, including potential loss of principal. Past performance does not guarantee future results. StagTower is currently in the process of company formation in Estonia as of this posting.

Sources:

1. https://www.cbc.ca/news/politics/ircc-immigration-housing-canada-1.7080376

2. https://www.canada.ca/en/immigration-refugees-citizenship/corporate/transparency/committees/cimm-nov-25-2024/housing-shortages.html

3. https://www.canada.ca/en/immigration-refugees-citizenship/news/2025/03/canada-takes-action-to-support-housing-with-new-immigration-measures.html

4. https://www.visaverge.com/immigration/how-immigration-has-influenced-canadas-housing-crisis-over-time/

5. https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/annual-report-parliament-immigration-2024.html

6. https://www.pbo-dpb.ca/en/additional-analyses--analyses-complementaires/BLOG-2425-006--impact-2025-2027-immigration-levels-plan-canada-housing-gap--repercussions-plan-niveaux-immigration-2025-2027-ecart-offre-logement-canada

Canada is experiencing a housing crisis unlike anything in its modern history. But for savvy international investors, this crisis represents one of the most compelling real estate investment opportunities available today. Here's why the perfect storm of immigration demand and supply constraints makes Canadian multifamily properties an essential portfolio holding.

Canada welcomed nearly twice as many permanent residents in 2025 as it did in 2015, with immigration targets reaching 500,000 permanent residents annually. But here's the critical insight: temporary and permanent immigration accounted for almost 98% of Canada's population growth in 2023.

This unprecedented population surge created a historic mismatch between demand and supply:

• Population Growth: Canada's population grew by a record 1.23 million new residents in 2023, more than double the pre-pandemic record set in 2019

• Housing Construction: Construction began on about 245,367 new housing units in 2024, down from a recent high of 271,198 starts in 2021

• Supply Gap: Canada added 3.9 new residents per housing start in 2024, far higher than at any point prior to the COVID-19 pandemic

Here's what makes this opportunity particularly compelling for rental property investors: newer immigrants are much more likely to rent (about 60 percent) compared to Canadian-born citizens and long-term immigrants (about 20 percent were renters).

The Bank of Canada noted that "Strong population growth in recent years has boosted demand for housing... The increase in housing demand from newcomers is being felt across all types of housing, but the largest initial impact tends to be in rental markets".

Current Rental Market Conditions:

• Average one-bedroom rental rates in Vancouver and Toronto were $2,530 and $2,360, respectively, while two-bedroom units were $3,430 and $3,077 in those cities as of January 2025

• The average cross-country rental rate in December 2024 was $2,109, still over $300 higher than the $1,805 recorded in December 2019

Despite record demand, Canada faces a construction capacity crisis that ensures sustained rental demand:

Canada needs an estimated 390,000 new units annually by 2030 to eliminate the housing gap, but current construction levels fall dramatically short. Even with relatively high levels of construction, the main concern is struggling to keep pace with increased demand due to growing population, with TD Economics estimating Canada could be short over 300,000 housing units from 2024-2026.

As of February 2024, it took 22 months to finish a construction project in Canada, with construction timelines lengthening across all types of homes. This extended timeline means supply responses lag demand by years, not months.

The construction industry faces persistent challenges:

• Labour shortages and supply chain disruptions continue despite industry resilience

• The Building Construction Price Index for apartments rose by 4% in the first half of 2024, with Toronto seeing the index growth slow from 15% to 5%

The federal government explicitly acknowledges the immigration-housing connection. Federal public servants warned two years ago that "Rapid increases put pressure on health care and affordable housing", and immigrants account for 23% of all general contractors and residential builders, playing a vital role in addressing the housing shortage.

Recent policy adjustments show government awareness but limited immediate impact:

• Canada lowered its 2025 permanent resident target to 395,000 from 500,000, with temporary residents capped to reduce from 7.3% to 5% of population by 2027

• In the first nine months of 2024, international students coming to Canada were down 43% compared with 2023, resulting in rental price decreases of over 10% in Vancouver and 8% in Toronto for some unit types

However, the Parliamentary Budget Office estimates that even with immigration reductions, Canada's housing gap in 2030 will still be 658,000 units.

The data shows multifamily rental properties are particularly well-positioned:

Apartment construction is mainly supported by the rental market, proving more resilient than the condominium market which is in strong decline, with sustained demand from increased migration and various government measures.

Key Multifamily Trends:

• A resurgence in purpose-built rental construction supported by skyrocketing rental prices and government programs, such as the federal government's decision to remove the GST on purpose-built rental construction

• Long term fundamentals continue to support low vacancy rates in affordable rental segments, with minimal impact expected to vacancy rates for the most in-demand rental units such as those with rent controls

• Housing supply shortages will encourage more multi-unit starts, though reduced migration will provide some moderation in 2025

This crisis creates a compelling investment thesis for international investors:

1. Sustained Demand: Even with immigration reductions, Canada still faces structural housing shortages and pent-up demand

2. Supply Constraints: Construction timelines and costs ensure supply responses lag demand significantly

3. Rental Focus: Renting continues to be the more affordable housing option for many Canadians, coupled with rapid population growth creating substantial pent-up demand for rental housing

4. Government Support: Policy measures support purpose-built rental construction while immigration remains essential for economic growth

The housing crisis isn't uniform across Canada. A recent study found that immigration's effect on housing costs was stronger in larger cities and in provinces like Ontario, Quebec, and British Columbia, where most newcomers settle and housing supply is most limited.

Key Metropolitan Areas:

• Toronto: Housing starts projected to range from 35,000-42,000 annually through 2026, well below demand levels, with existing home sales in 2024 well below the 10-year average

• Vancouver: Continues to face supply constraints with rental market adjustments

• Calgary: Showing strong housing start numbers with 38% increase in units started in the first half of 2024, though vacancy rates forecast at just 1.1% in 2024 and 1% in 2025

Canada's immigration-driven housing crisis isn't a temporary phenomenon—it's a structural shift that creates lasting investment opportunities. CMHC calls for around 430,000 to 480,000 new homes annually by 2035 to restore affordability, indicating the supply-demand imbalance will persist for years.

For international investors seeking stable, income-producing assets with appreciation potential, Canadian multifamily real estate offers:

• Sustained rental demand from immigration-driven population growth

• Supply constraints that protect against oversupply

• Government policies supporting purpose-built rental construction

• Currency diversification benefits for international portfolios

• Opportunities across the socio-economic fabric, from simple to luxury buildings available

The immigration-driven housing crisis represents more than a challenge—it's a generational investment opportunity in one of the world's most stable real estate markets.

This content is for educational purposes only and does not constitute investment advice. All investments involve risk, including potential loss of principal. Past performance does not guarantee future results. StagTower is currently in the process of company formation in Estonia as of this posting.

Sources:

1. https://www.cbc.ca/news/politics/ircc-immigration-housing-canada-1.7080376

2. https://www.canada.ca/en/immigration-refugees-citizenship/corporate/transparency/committees/cimm-nov-25-2024/housing-shortages.html

3. https://www.canada.ca/en/immigration-refugees-citizenship/news/2025/03/canada-takes-action-to-support-housing-with-new-immigration-measures.html

4. https://www.visaverge.com/immigration/how-immigration-has-influenced-canadas-housing-crisis-over-time/

5. https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/annual-report-parliament-immigration-2024.html

6. https://www.pbo-dpb.ca/en/additional-analyses--analyses-complementaires/BLOG-2425-006--impact-2025-2027-immigration-levels-plan-canada-housing-gap--repercussions-plan-niveaux-immigration-2025-2027-ecart-offre-logement-canada