Does Immigration Really Drive Up Canadian Housing Prices? A Look at the Evidence

On This Page You Will Find:

• What the Statistics Canada study says about immigration and housing prices
• How much immigration contributed to rising house prices
• Differences by region and city size
• Why methodology matters when studying immigration impacts
• Policy takeaways and future considerations

Immigration and House Prices in Canada: What the Data Shows

In recent years, public debate in Canada has often linked rising immigration levels to soaring housing prices. A new study from Statistics Canada and Immigration, Refugees and Citizenship Canada offers some of the clearest evidence to date on this topic – and the results show a more nuanced reality than commonly assumed.

From 2006 to 2021, Canada welcomed a large number of new immigrants, most of whom settled in major urban centres. Over the same period, housing prices rose dramatically in many parts of the country. But does one cause the other? The study, which used advanced statistical models and census data across 5,800 municipalities, finds that immigration does contribute to higher housing prices – but the extent of the effect depends heavily on location and timing.

What the Study Found: Immigration’s Measurable Effect

The report focuses on new immigrants who arrived in Canada within the previous five years and how their numbers relate to changes in house prices and rents. Using a technique called first-difference fixed-effects instrumental variable modelling, the researchers isolated the specific impact of immigration while controlling for other factors like income growth, housing supply, age demographics, and unemployment.

Across municipalities with at least 1,000 residents, a 1% increase in new immigrants was associated with:

• A 0.143% increase in median house values
• A 0.045% increase in median monthly rents

On average, this means immigration accounted for about 11% of the increase in house prices and rents over the study period.

Larger Cities Saw a Bigger Impact

In Canada’s 53 largest municipalities – those with populations over 100,000 – the effect of immigration on housing was much stronger. These cities were home to more than 80% of new immigrants in 2021.

In large cities, the study found that:

• A 1% increase in new immigrants was linked to a 0.419% increase in house values
• Immigration explained up to 21% of the rise in house prices
• Rent increases were also higher, although partly dampened by rent control policies

Smaller municipalities, on the other hand, saw minimal or no effect from immigration on housing costs.

Not All Time Periods Showed the Same Pattern

Interestingly, the connection between immigration and housing prices varied across different five-year census periods:

• 2006–2011: Strong positive link – especially in the Prairie provinces and Quebec
• 2011–2016: Negative or weak link – housing prices rose fastest in Ontario despite fewer immigrants
• 2016–2021: Positive link again – this time centred in Ontario and B.C.

These shifts underline that immigration is not the only force shaping the housing market. Broader economic and policy conditions also play a major role.

Other Key Drivers of Rising Prices

While immigration did contribute to increased demand, the study found other strong predictors of house price growth:

• Rising household income
• Increasing share of young adults
• Growing housing supply, which can either dampen or amplify price effects depending on demand

On the other hand, the presence of more seniors tended to reduce demand, slightly lowering prices in some areas.

Why Methodology Matters in This Debate

Past studies on this issue often reached different conclusions because they lacked robust data or didn’t account for regional variation. This study used a model that tracked changes over time in the same municipalities, addressing common challenges like endogeneity and omitted variables. In simple terms, it allows a clearer picture of what drives what.

The study also highlights that immigrants often move to areas with economic opportunity – which itself pushes housing prices higher. So the question of whether immigration causes price increases or simply follows them is more complex than it appears.

Policy Implications

The findings suggest that while immigration adds to housing demand, it’s only one part of a larger picture. Policymakers should be cautious about blaming immigration alone for affordability issues. Solutions will require coordination across housing supply, zoning policy, labour market planning, and immigration strategy.

The evidence supports calls for faster housing construction, especially in the cities where most newcomers settle. It also strengthens the case for targeted regional immigration programs that help distribute newcomers more evenly across the country.

Not the Dominant Cause

Immigration does affect housing prices in Canada, especially in large cities – but it is not the sole or even the dominant cause of the country’s housing challenges. Income growth, demographics, and local housing policies all interact with immigration to shape market outcomes. Future debates should be informed by the kind of high-quality, detailed data analysis found in this study.

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