EconoFACTS

December 17, 2025 | 09:59

Canada’s Population Estimates (2025Q4) — Reversal Underway

Economist

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

Canada’s population grew just 0.2% y/y in Q4 (marked as of October 1st, 2025), down sharply from highs above 3% seen just over a year ago. On a quarter-over-quarter basis, the population fell 0.4% annualized the sharpest, and only second, quarter-over-quarter decline on record dating back to the 1940s. Note also that this quarter tends to be a strong one from a seasonal perspective, leaving the quarterly decline at 1.4% on a seasonally-adjusted annualized basis.

This is right on cue with changes to the immigration program first outlined in the November 2024 Immigration Levels Plan, which were then doubled-down on in the 2025 version released alongside the federal budget. We’ve argued all along that the explosion in population growth—to nearly 1.3 mln people within a year at one point—was playing a major role in many economic issues Canadian policymakers have been struggling to deal with. That is, housing affordability; surging rent; productivity and infrastructure stress; services inflation; and youth unemployment rates. The normalization of population growth is now well underway and being immediately felt on the ground in some areas.

Nonpermanent resident (NPR) net outflows accelerated further following caps on international students and temporary foreign workers, with a net outflow of 176,000 in the quarter. The process of normalizing this segment of the population is now well underway—Ottawa is targeting a 5% share from 7.6% at the high and 6.9% as of the latest quarter. That implies further net outflows ahead, likely right through 2027. The impact is being seen most vividly in the rapidly-softening rental market.

Regionally, the impact of net NPR outflows is, as expected, cutting deeply in B.C. and Ontario. In fact, Ontario and B.C. saw their first annual population declines on record (-0.2% y/y). As it stands now, B.C.’s NPR share sits at 8.4% and Ontario’s is at 7.9%. With the rest of the country around the 5% mark give or take, these two provinces will continue to face the brunt of the net NPR adjustment.

Meantime, permanent immigration remained solid at above 330k (saar), although that's also down from recent highs given reduced federal targets. Ottawa’s target for the upcoming three years is now set at 380 per year.

Canadians also continue to move around the country, but the pace of overall interprovincial migration is slowing down after a post-pandemic boom. Net migration to Alberta remained strong and has run at just under 30k people over the past year. A strong economy and favourable affordability remain draws. Atlantic Canada’s inward migration boom has really flattened out. This had been a blessing (driving growth) and a curse (infrastructure and housing stress) for the region, but that appears to be neutralizing.

Ontario is seeing fewer net outflows each quarter, although the past year has still run at just under 18k. Interestingly, a sharp reversal in NPR inflows might ultimately push fewer resident Ontarians elsewhere, in part because of less stress on housing affordability. Indeed, affordability was arguably the biggest reason for movement to Alberta and Atlantic Canada; but with Ontario prices and rents down (while the latter remain near peak levels), the ‘affordability arbitrage' seems to be running its course. Future migration patterns will likely be driven more by relative economic/job market fundamentals.

The Bottom Line: A major population adjustment is well underway, and it remains one of the biggest economic stories in Canada. In order to hit the NPR target share, we’ll need to see population growth run barely above zero through 2028 (births and permanent immigration flows held constant), before settling back into a longer-term run rate of just under 1%. Among the impacts we’re tracking are a significant weakening of the rental market, especially with the pipeline chock-full of supply; less pressure on services inflation; easing slack in the youth job market; and a likely pickup in productivity and growth in real GDP per capita.