One of the most striking shifts in the Liberal federal budget is how directly it links immigration policy to housing affordability, something many in Canada’s housing policy community have been reluctant to acknowledge for years.
The budget states:
“Housing affordability has improved… supported by… lower immigration targets.”
“We are taking back control over the immigration system and putting Canada on a trajectory to bring immigration back to sustainable levels.”
This represents a significant pivot from the dominant narrative of the past decade, one that framed the housing crisis primarily as a zoning and “gatekeeping” issue at the municipal level.
Both the previous government and the current opposition leader leaned heavily on that idea.
And to be fair, they were echoing what many of Canada’s leading housing economists were arguing: that rapidly rising home prices and rents had little to do with population growth tripling in under a decade, and more to do with the fact that housing supply didn’t respond quickly enough.
The solution, we were told, was simply to “build more” — even suggesting that tripling housing completions was achievable.
But this budget appears to acknowledge two realities that were often downplayed in public debate:
- Population growth is not exogenous.
It is a policy choice — and it matters for affordability.
We cannot treat Canada’s population growth as something outside our control. Immigration is central to Canada’s identity and economic strength, but the pace of growth has to be aligned with the country’s capacity to house the people we welcome. When population growth consistently outpaces housing completions, affordability deteriorates. This is not ideological; it is arithmetic.
- Housing supply in Canada is not infinitely elastic.
We cannot triple completions at will — especially in a falling market.
Developers do not accelerate construction during periods of declining prices. Housing starts fall when prices fall. This is a standard feature of housing cycles in every advanced economy. And it’s exactly what we are seeing now in Ontario and BC: despite policy efforts to encourage more construction, starts are declining because confidence and profitability have weakened.
This is why the shift in language matters.
The budget reflects a move away from the idea that supply alone can solve the affordability crisis in the short run and toward the recognition that immigration policy must be calibrated to real-world construction capacity.
This does not mean closing the door to newcomers, far from it. But it does mean aligning population growth with our ability to ensure people can actually afford to live here.
For years, raising this point was framed as anti-growth or anti-immigration. But this budget makes clear that sustainable immigration and sustainable housing are not competing objectives; they depend on one another.
This continues a shift already underway, but makes it explicit: housing affordability depends on aligning population growth with our capacity to build.
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn
November 7, 2025
Market |