Canadian Population Growth Hits Near-Record Low, Signaling Real Estate Headwinds

Canada's population saw an unusually slow rise in the second quarter of 2025, recording a mere 0.1% increase. Excluding the period immediately following pandemic border restrictions, this is the slowest growth rate observed for a second quarter since 1946.

Shifting Growth Dynamics

As is typical for Canada, international migration drove the majority of the growth, contributing 33,694 people. This accounted for approximately 71.5% of the population increase in the quarter. The remaining growth came from natural increases (births).

However, the primary reason for the overall slowdown was a significant, government-induced decline in Non-Permanent Residents (NPRs). Following a federal announcement in 2024 to curb permit numbers, the NPR population fell for the third straight quarter.

The total number of NPRs dropped from a peak of 3,149,131 (7.6% of the total population) to 3,024,216 (7.3% of the total population) by July 1, 2025. The reduction of over 58,000 NPRs during the second quarter of 2025 was one of the largest quarterly decreases ever recorded. This decline was mainly concentrated among study, work, and combined permit holders.

Regional Impact and Migration

While all provinces were affected, the NPR reduction had the largest impact on Ontario and British Columbia.

In addition to the NPR decline, these two provinces also saw large net losses due to interprovincial migration, with residents continuing to relocate primarily to Alberta. British Columbia was the only province to see an overall population contraction during the second quarter of 2025.

Direct Consequences for Commercial Real Estate

Current federal policy and projections suggest the NPR population will continue to fall, and overall international migration may temper, leading to a further deceleration or even decline in Canada’s overall population heading into 2026. This rare demographic headwind is already affecting the commercial real estate market.

Multi-Family and Rental Housing

The most immediate impact is on the rental market. Demand, especially for units typically occupied by foreign students and non-permanent workers, has dropped substantially. Consequently, vacancy rates in purpose-built rental properties are rising, exacerbated by new supply coming online. This trend is most acutely felt in gateway cities like Toronto and Vancouver.

Commercial and Retail Leasing

For commercial retail properties, the impact is also material. Strong population growth previously boosted retail sales, particularly for essential goods (food, personal care). More people meant higher foot traffic and greater aggregate retail spending—a key driver behind the post-pandemic resurgence of necessity-based shopping centres.

However, with population growth now easing, foot traffic and overall spending volumes are expected to become constrained. This softening demographic support could reduce the appeal of some retail property types moving forward.

Breakdown of Second Quarter 2025 Population Change

The chart below illustrates how international migration and natural increase contributed to the overall population change in the second quarter of 2025, emphasizing the significant drag caused by the net loss of Non-Permanent Residents.

Component of Population Change	Net Change (People)	Contribution to Total Growth
Total International Migration	33,694	71.5%
Permanent Residents (Immigration)	≈ 92,413	N/A
Non-Permanent Residents (NPRs) Change	-58,719	(Significant Drag)
Natural Increase (Births minus Deaths)	≈ 13,446	28.5%
Total Population Growth	47,140	100%

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