I love this game. I do wish the yard/house expansions increased your population limit, but it seems to stay permanently locked at seven cats.
(Edit: I’m sorry! I looked at the math and there actually is a hard cap of 21) It’s based on how many toys and scratch-able things (posts, cat grass, sofas) you have, but there are diminishing returns.
But you’re right! Expanding your area should definitely permanently boost the limit, I’ll add that in the next version ^^