Canada's Housing Slowdown Raises Pressure for a Shift in Immigration Policy, National Bank Says

12:31 PM EDT, 10/21/2026 (MT Newswires) -- Canada's housing market continued to cool in September, as trade uncertainty, higher interest rates and slower population growth weighed on resales, new construction and rental demand, according to National Bank Canada in a Wednesday note. Revised demographic data show that Canada's population grew 0.5% annually as of April 1, reversing an earlier estimate of a 0.5% decline. Non-permanent residents accounted for 6.7% of the population, wrote the bank. However, if the federal government meets its target of reducing this share to 5% by the end of 2027, population growth could slow to 0.2% next year and 0.1% in 2028, adding to pressure on housing demand, National Bank said. The prolonged housing slowdown could gradually improve affordability but also raises questions about whether immigration policy needs to be adjusted. The bank suggested that a gradual, targeted increase in immigration levels, particularly for skilled workers in sectors tied to major investment projects, could help balance demographic needs with housing market conditions. Prime Minister Mark Carney has already expressed openness to a "controlled increase" in population, while attention is turning to the federal government's 2027-2029 immigration plan, expected in November. The bank also highlighted the international homebuyer ban, which is scheduled to expire next January. Allowing international buyers to purchase newly built homes could help absorb excess inventory. However, without policy adjustments, subdued population growth, elevated borrowing and construction costs, and geopolitical uncertainty could prolong the housing downturn, according to National Bank.