Toronto – November 13, 2026 – Canada's current pace of housing construction is sufficient to absorb the population growth that will result from Budget 2026's new immigration levels plan, but the population surge of 2022 to 2024 left behind a supply gap that will take years to close, according to a new analysis from Rentals.ca. At about 240,000 housing starts a year, current construction can support roughly 500,000 new residents annually, above projected 2027 population growth of 177,000 to 440,000 in every scenario examined.
"Ottawa’s one-time measures will push permanent resident admissions well above target next year, but most of those people already live in Canada. The only real addition to the population from these measures comes from workers who would otherwise have left. Keeping them here means fewer units vacated by departing renters, which supports the rental recovery, already underway in Toronto and Vancouver. With vacancy elevated and apartment completions at record highs, the market has room to absorb that demand without a deterioration in affordability," said Shaun Hildebrand, President of Urbanation.
The 2027 to 2029 Immigration Levels Plan holds permanent resident admissions at 380,000 a year, and targets 370,000 new temporary resident arrivals annually. On top of that, up to 282,000 people will transition to permanent residence in 2027 through one-time measures, including 200,000 announced in Budget 2026 and about 82,000 remaining from Budget 2025’s initiatives. . However, the one-time transitions are for people already living in Canada, and only add to the population if those people would otherwise have left. About 169,000 of them are protected persons and humanitarian applicants who had no realistic prospect of leaving the country, meaning permanent residence adds nothing to the population. The remaining 113,000 are workers, some of whom might otherwise have left when their permits expired.
The analysis compares Statistics Canada population estimates with CMHC housing starts since 1990. From 1990 to 2015, a period when supply kept pace with population, Canada started one home for every 2.08 new residents. Applying that ratio to the 240,318 starts recorded in the 12 months to Q2 2026 gives an absorption capacity of about 500,000 people, while the population grew by just 189,000 over the same period. Projected 2027 population growth would use between 35% and 88% of that capacity. Even the highest-growth scenario of 440,000 likely overstates growth, as some of the 113,000 workers would have stayed regardless and the estimate assumes temporary resident arrivals will reach the full 370,000 target, despite actual arrivals in 2026 being well below the targets in last year's plan.
That capacity has not always been there. In 2022 and 2023, the population grew by 2.11 million while starts totalled 465,000, or 54% fewer starts relative to population growth than the 1990 to 2015 average. In the year to Q1 2024, population growth of 1.23 million was about 2.6 times what that year's housing starts could absorb. As a result, the gap between cumulative housing starts and the pace required by population growth peaked at about 780,000 units in Q3 2024, and still stood at about 571,000 units as of Q2 2026.
Closing that gap will require several years of construction above what population growth requires. Even under the lowest-growth scenario, a year of construction at the current pace would reduce the gap by about 155,000 units, meaning it would take nearly four years to close.. Demand from the existing population is also likely to rise, as permanent residence makes it easier for newcomers to move out of shared accommodation and rent independently or buy a home.
Market conditions show there is room today. Average asking rents have declined annually for 25 consecutive months and are down 5.4% over two years, while the national purpose-built rental vacancy rate rose to 3.1% in 2025 from 2.2%. However, that cushion is already narrowing. Asking rents in Toronto and Vancouver are rising for the first time in nearly three years, housing starts eased to 234,517 in the 12 months to September 2026, and the collapse in condo presales will reduce completions in 2028 and 2029. As a result, the analysis finds that the market can absorb next year’s population growth, but that room will narrow from 2028 as completions decline..
The full analysis, including methodology and population scenarios, is available on the Rentals.ca blog.
For more information or to schedule a media interview, please reach out to media@rentals.ca.
Media Contacts:
Giacomo Ladas – giacomo@rentals.ca
Shaun Hildebrand – shaun@urbanation.ca
The supply gap measures how far housing starts have fallen behind the pace that kept up with population growth from 1990 to 2015, not the total housing shortage. Population figures are Statistics Canada quarterly estimates, and housing starts are CMHC national totals for centres with populations of 10,000 or more.