Jan 14, 2026
Canada’s rental market finally showed signs of easing in 2025, and while that may sound like a cause for relief, the softening was not a positive economic sign. According to the Canada Mortgage and Housing Corporation (CMHC), vacancy rates rose to 3.1% nationally and rent growth slowed, with the average two-bedroom, purpose-built apartment increasing 5.1% to $1,550, down from faster growth a year earlier (1). CMHC linked the shift to a sudden change in population dynamics after years of rapid growth in new arrivals.
A key driver of that slowdown was a sharp decline in international students following federal policy changes. Ottawa introduced caps on study permits and tightened eligibility rules in 2024 and 2025 to rein in temporary resident growth and address concerns about program integrity and student visa misuse. The impact was immediate: International student arrivals in 2025 were nearly 60% lower than in 2024, while overall international enrollment fell by about 21% (2).
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International students had become a major source of rental demand in many cities, particularly near college and university campuses, often competing for purpose-built rentals and investor-owned condos. As that demand dropped, rental markets that had tightened year after year began to loosen. CMHC noted that areas with large student populations were among the first to see higher vacancies and slower rent increases, especially in student-oriented neighbourhoods.
The housing data, however, reflects only part of the adjustment underway. Fewer international students also mean less tuition revenue for post-secondary institutions and reduced spending in local economies that grew around student populations. As colleges and universities cut costs and local businesses adapt to lower foot traffic, the economic effects of Canada’s international student reset are extending beyond housing and into jobs, services and municipal finances.
Campuses adjusting to lower enrollment
Canadian colleges and universities have relied heavily on international tuition revenue to fund classrooms, research, facilities and staffing. The sudden drop in students has forced institutions to cut costs, trim programs and reduce staff.
At Kwantlen Polytechnic University in British Columbia, international enrollment plunged nearly 60% year over year. The university announced in September that it would have to cut up to 45 full-time positions, leave 20 unfilled vacancies open, slash $3.3 million in discretionary spending and not renew some temporary contracts (3).
Ontario’s Centennial College suspended 49 programs in 2025 after significant revenue losses tied to declining international student numbers (4). Saskatchewan Polytechnic confirmed layoffs of staff due in part to lower international student enrolment and revenue shortfalls, underscoring how the impact extends within Canada (5).
Conestoga College in Ontario provides one of the clearest examples of how federal policy changes have reshaped post-secondary institutions and their surrounding communities. Once among the country’s largest recruiters of international students, the college reported just over 8,500 international students in spring 2025, down from more than 22,600 a year earlier, a decline of roughly 60% driven largely by fewer new study permits (6).
The drop placed significant pressure on revenue, as international tuition had become a major source of operating funds. While Conestoga reported a $121-million surplus for the 2024–25 fiscal year, it projected a budget deficit for 2025–26 as enrollment declined. The college responded with cost-cutting measures and workforce adjustments. In spring 2025, nearly 180 support staff received layoff notices and hiring was scaled back. By December 2025, after issuing notices to 181 full-time faculty, Conestoga announced an additional 197 layoff notices to support staff during a virtual town hall, marking the largest round of workforce reductions in its recent history (7).
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Program suspensions, operational consolidation and other adjustments followed. The impact extended into the Kitchener–Waterloo regional economy, where international students had been a major source of housing demand and consumer spending. Rental markets near Conestoga campuses softened, with higher vacancies and slower rent growth replacing the intense competition seen during earlier student boom years, according to property managers and housing analysts (8).
Local businesses that relied heavily on student foot traffic, including cafes, restaurants, retail shops and transit-adjacent services, have also adjusted to lower patronage. While comprehensive data directly linking business performance to enrollment changes is limited, reporting and union commentary point to an economic recalibration in traditionally student-oriented districts.
Conestoga’s experience underscores how exposed some institutions and host communities became after years of rapid international growth. When student numbers fell sharply, the effects were structural — affecting finances, staffing and regional economies.
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Broader economic implications for communities
Beyond campuses and businesses, the reduction in international students is impacting the social and economic vibrancy of entire communities. Students historically filled part-time roles, supported consumer demand and contributed to cultural and volunteer programs. A smaller student population means fewer customers, fewer workers for service roles and less money circulating locally.
Regions including Vancouver, Toronto, Montreal and smaller university towns are seeing how shifts in population dynamics can influence housing markets, retail activity, transit use and municipal revenues tied to consumption and housing. Communities are now reassessing economic strategies that had become closely tied to international student growth.
Housing, jobs and tuition: what Canadians need to know
The international student decline is beginning to show up in everyday life. Renters may see slightly higher vacancy rates and slower rent growth, but that relief is limited if weaker local economies lead businesses to cut services or hold back wages.
Service-sector job openings may emerge as roles once filled by students become available, but softer consumer demand reduces overall employment stability. At the same time, post-secondary institutions are reviewing tuition policies, program offerings and recruitment strategies to stabilize finances, adding uncertainty for current and prospective students.
Read more: The ultra-rich are bailing on volatile stocks right now — these 4 shockproof assets are their new safe havens
A new economic normal
Canada’s post-secondary sector and many local economies are entering a new reality in 2026. The drop in international students, driven by federal policy, is reshaping housing demand, employment patterns, education finances and community spending. Understanding how these changes intersect can help Canadians better navigate housing, work and financial decisions in cities where student populations once played an outsized economic role.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CMHC (1); Government of Canada (2); Vancover Sun (3); CityNews Ottawa (4); PA Now (5); Conestoga College (6); CityNews Kitchener (7, 8)
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Leslie Kennedy served as an editor at Thomson Reuters and for Star Media Group, followed by a number of years as a writer and editor and content manager in marketing communications, before returning to her editorial roots. She is a graduate of Humber College’s post-graduate journalism program and has been a professional writer and editor ever since.
