Canadas Slowing Population Growth Strains Housing Fertility Rates

Imagine Canada's population growth curve as a stock market chart — once soaring steadily upward, now showing signs of fatigue and facing potential decline. This isn't alarmism but a real demographic shift confirmed by Statistics Canada's latest projections and analysis from BMO Capital Markets. Canada is transitioning from years of rapid population expansion into a period of significant slowdown, with profound implications for its economy, society, and particularly its housing market and birth rates.

I. Sharp Decline in Growth: Near-Zero Increase Projected by 2026

Statistics Canada's medium-growth scenario (M1) predicts the country's population growth will nearly flatline in 2026, with the total population remaining at approximately 41.66 million — an annual increase of fewer than 4,000 people. This stands in stark contrast to recent years that saw hundreds of thousands of new residents annually. While modest recovery is expected after 2027, growth rates will likely return to pre-2017 levels.

BMO economist Kavcic notes that while the projected 0.7%-0.8% growth by 2029 aligns with current immigration targets, it represents a significant drop from recent highs and even falls below the pre-pandemic average.

II. Dual Drivers: Tighter Immigration Rules and Falling Birth Rates

This demographic slowdown stems from two primary factors:

Immigration Policy Changes: The federal government has progressively reduced quotas for international students and non-permanent residents while tightening immigration pathways. These groups previously fueled substantial population growth, but their contribution is now diminishing.

Declining Fertility: Natural population growth continues to weaken. BMO's report indicates Canada's fertility rate will keep falling, with the country expected to enter negative natural growth by 2028 — when deaths outnumber births. This structural shift reflects both an aging population and millennials moving beyond prime childbearing years. Soaring housing costs, rising living expenses, and childcare pressures have further suppressed birth rates.

III. The Long-Term Outlook: Expansion Continues, but Slower

Despite the current slowdown, Canada's fundamental demographic trajectory remains unchanged. Statistics Canada projects the population will reach 57.4 million by 2074 — just 3.9% lower than previous estimates — suggesting immigration will continue driving long-term growth. The country maintains strong appeal for newcomers, though the pace of expansion has moderated.

IV. Structural Challenges: Housing and Fertility Under Pressure

The demographic shift creates twin pressures on Canada's economy:

Housing Market Strain: With the millennial cohort — historically the largest homebuying group — now aging past peak purchasing years, and Generation Z not yet ready to enter the market en masse, housing demand faces a prolonged slump. Compounding this, Zillennials' ability to afford today's elevated prices remains uncertain.

Fertility Crisis: Multiple studies confirm that high housing costs suppress birth rates, exacerbating Canada's already-low fertility. Simultaneously, record numbers of working-age Canadians are emigrating, straining labor supplies and consumer spending power — creating a dual drag on population and economic growth.

V. Policy Responses: Navigating the Low-Growth Era

This demographic "intermission" offers Canada a chance to address infrastructure strains while testing economic resilience. Key policy considerations include:

• Immigration Optimization: Balancing intake levels with skilled labor needs to support economic transformation
• Fertility Incentives: Enhanced parental benefits, childcare access, and workplace flexibility to encourage childbearing
• Housing Stabilization: Increasing supply while curbing speculation to improve affordability
• Talent Retention: Improving quality of life and career opportunities to stem working-age emigration

Demographic changes unfold over generations, requiring coordinated responses across government, business, and civil society. How Canada navigates this population growth plateau will significantly shape its future economic and social landscape.