The federal government’s international student cap is showing its first measurable effects on Canada’s rental market, with prices softening in key university towns across the country. After years of skyrocketing rents that put immense pressure on both domestic students and working families, we’re seeing what many housing advocates call a “modest but meaningful correction” in rental costs.
In Halifax, where students make up nearly a quarter of the population during academic terms, average rents for one-bedroom apartments have decreased by 3.2% since January, according to data from Rentals.ca. This marks the first quarterly decline in over three years.
“We’re still in a housing crisis, make no mistake,” says Dr. Jill Murray, housing economist at Dalhousie University. “But this policy is creating breathing room in markets that had become completely unsustainable for the average Canadian renter.”
The federal government implemented the cap in January, reducing international student permits by 35% nationwide for 2024. The policy aimed to address what Immigration Minister Marc Miller described as “unsustainable growth” in the international education sector, which had ballooned from 219,000 students in 2015 to over 800,000 by late 2023.
The impact has been particularly noticeable in mid-sized cities with large student populations. Kingston, Ontario has seen average rents decline by 4.7% this quarter, while Victoria, British Columbia reports a 3.9% decrease. These figures represent the first meaningful drops since pre-pandemic times.
“What we’re witnessing is simple supply and demand,” explains Thomas Wong, senior market analyst with the Canada Mortgage and Housing Corporation. “When you reduce housing demand by tens of thousands of people in communities already struggling with limited rental stock, you’ll inevitably see some price stabilization.”
The rent decreases remain concentrated in university towns and specific neighborhoods near campuses. Canada’s largest metropolitan centers like Toronto and Vancouver have seen minimal relief, with rents dipping less than 1% in most neighborhoods, according to the latest Royal LePage rental market report.
For Canadian students who have struggled with housing costs, the change couldn’t come soon enough. A 2023 survey by the Canadian Federation of Students found that 62% of domestic post-secondary students were spending more than half their income on housing, forcing many to take on additional debt or work multiple jobs.
Emily Chen, a third-year nursing student at Western University, says she noticed the difference immediately when apartment hunting this spring. “Last year, there would be twenty people at every viewing, and landlords were asking for six months’ rent in advance. This year, I actually had options and negotiated my rent down $200 from the asking price.”
Real estate investment groups have expressed concern about the trend. The Canadian Federation of Apartment Associations noted in their quarterly bulletin that “regulatory interference in natural market dynamics” could discourage new rental development. They warn this might worsen the long-term housing shortage as builders reassess profitability of new multi-unit projects.
Housing advocates counter that the rental market had become dangerously disconnected from local incomes. “What good is new housing if nobody who actually lives and works here can afford it?” asks Jordan Thompson of Affordable Housing Now, a national advocacy group. “The international student situation had become a pressure cooker for rental costs.”
The federal policy has drawn criticism from post-secondary institutions that had grown dependent on the higher tuition fees paid by international students. Several universities, including the University of Windsor and Cape Breton University, have already announced budget cuts in response to projected enrollment declines.
“There’s no question this creates financial challenges for institutions that expanded rapidly to accommodate international enrollment,” acknowledges Dr. Samir Chopra, president of the Canadian Association of University Teachers. “But the housing crisis was threatening domestic students’ access to education. Something had to give.”
Provincial responses to the cap have varied widely. British Columbia and Ontario have generally supported the federal approach, while Manitoba recently announced plans to help universities adapt through transitional funding. Quebec has requested exemptions for francophone institutions, arguing they face unique recruitment challenges.
The federal government maintains the cap is a temporary measure designed to bring stability to a system that had outgrown available infrastructure. Minister Miller emphasized in April that “international students remain a vital part of Canada’s educational landscape, but growth needs to happen alongside housing development, not ahead of it.”
For many Canadians outside university communities, the rent decreases may seem insufficient given the broader affordability crisis. A family of four in Vancouver still faces average monthly rents above $3,000 for a modest two-bedroom apartment, according to the latest CMHC data.
Nevertheless, housing experts suggest this could mark a turning point. “What we’re seeing is the first evidence that policy can actually influence rental costs,” notes Wong. “The student cap alone won’t solve our housing crisis, but it demonstrates that thoughtful regulation can help correct market imbalances that hurt everyday Canadians.”
Whether this trend continues remains to be seen. With the fall semester approaching, communities across Canada will soon have clearer data on international student enrollment and its impact on local housing markets. Until then, many renters are cautiously celebrating what appears to be the first break in Canada’s rental crisis in years.
