Whether immigration fuels the housing crisis is hotly debated. Recent wide fluctuations in population growth have provided a natural experiment. The data are in: slowing population growth makes housing more affordable.
by Jane O’Sullivan
In the past two decades, many high-income countries have endured unprecedented increases in the cost of homes to buy or rent. Many of them also faced accelerated population growth via increased immigration. Many progressive groups insist population growth does not cause housing inflation, claiming migrants are being scapegoated. However, advocates for lower immigration generally do not blame migrants, but the governments that choose to encourage high immigration rates.
Population growth alone does not govern housing affordability. Other factors simultaneously influence real estate prices, including government provision of subsidised housing, tax treatment favouring housing over other investments, planning regulations and foreign investment flows. The positive feedback when any asset class appreciates and attracts more investors can further fuel this inflation. Still, raw numbers matter and the law of supply and demand can’t reasonably be denied.
Since the Covid-19 pandemic, population growth has fluctuated wildly in the developed world, particularly in Anglo-sphere countries. This gives us an opportunity to see how rents respond to population change.
Canada
Canada had a particularly sharp post-pandemic migrant influx, with population growth peaking above 3% per annum in 2023-2024. The rapidly mounting pressures on housing and infrastructure, together with a looming election, prompted a policy back-flip from the Trudeau administration. After years of promoting rapid growth, in 2024 it scaled back temporary entrants and tightened measures to prevent overstaying. Permanent visas were only modestly reduced, as they mainly convert temporary residents to permanence. The net exodus of temporary migrants dropped population growth to near zero by the second half of 2025.
Rents, which had declined during the pandemic border closure, grew at an excruciating 8-12% per year during the immigration surge of 2022-2023. But they immediately stopped growing when the new policy came into effect and have declined over the past year (Figure 1).
Within Canada, the cities which used to receive most migrants have seen the greatest declines in rental prices. In 2025, Vancouver and Toronto rents fell 6.6% and 4.8% respectively.
New Zealand
New Zealand also saw an abrupt peak and decline in population growth after the pandemic. The small island nation has a free movement agreement with Australia, which means shifts in relative job prospects between the two countries can rapidly alter migration flows. Recent emigration flows mean population growth has dropped well below the rate of new home completions (Figure 2). The number of homes listed for rent increased by almost 13% in 2025, while rents on new listings fell throughout the year.
United Kingdom
The UK has seen a similarly steep retreat from its huge post-pandemic migrant intake of near 900,000 in 2023 to nearer 200,000 in 2025 (Figure 3). This level is typical of the pre-pandemic decade, but still historically high.
UK rental growth has slowed as population growth has slowed, now tracking below income growth, improving affordability. Nationally, rents grew 2.2% (annualised) in October 2025 (Figure 4), but the slow-down was greatest in the least affordable areas: London rents grew only 1.6%, about half the rate of general inflation.
USA
The US has also seen a rapid deceleration in population growth since the Trump administration aggressively enforced controls on both legal and illegal immigration. Net international migration fell from roughly 2.7 million in 2024 to about 1.3 million in 2025 — with the prospect of further decreases to come (Figure 5).
To take one example, Los Angeles County shrank by 28,000 people in 2025, even while new apartments hit the market. Rental vacancy rates rose to 5.3% and rents shrank to a four-year low, after rising for years. Denver, Colorado saw a similar rent fall. Vacancies have risen to 7.5% and some landlords now offer sweeteners like a month’s free rent or a $1000 gift voucher to entice renters.
National housing data also reflect these changes. The national median rent in the USA declined for the sixth consecutive month in January 2026, falling 1.4 % year over year to $1,353 per month – the lowest level since 2022.
China
China’s housing market has also seen a steady decline since its population peaked in 2021. Rents followed suit, declining each year since 2022. While economic growth boffins claim this is a crisis, it’s a great thing for Chinese households, helping to ensure the next generation lives better than the last.
Australia
Meanwhile, in Australia, population growth remains well above pre-pandemic levels and new housing completions have fallen well short of demand growth. As a result, rents have risen 31% over the past four years.
As shown in Figure 6, rental price hikes have tracked population growth relatively closely, diverging only from 2016 to 2019 as an apartment-building boom eased housing shortages. Meanwhile, real household incomes in Australia have stagnated. The average rent cost 26% of average household income in 2020 and 33% in 2025 (Figure 7).
The Upshot
The pattern is clear: rapid population growth increases housing costs, while slowing or reversing population growth reverses this trend. As housing affordability is a key driver of economic inequality and social stratification, a gentle deflation of housing costs should benefit most people – all except wealthy property speculators. Political progressives should remember this next time they denounce calls to moderate migration.
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