Canada's recent spike in population growth was driven almost entirely by immigration, official figures indicate
Targeting immigration broadly won’t help ensure better housing affordability, according to market observers.
Statistics Canada said that the 2.9% increase in population seen over the 12 months leading to July 1, 2023 was the largest ever recorded for such a period since 1957. Immigration accounted for fully 98% of this spike, StatCan added.
As a result, even bringing down the official immigration target to the number of houses built each year won't make housing more affordable – especially since new arrivals are free to live where they want in the country, according to David Hulchanski, a professor of housing and community development at the University of Toronto.
“Are we going to require all immigrants to stay in place?” Hulchanski asked. “The challenge with actually having a policy that links the number of immigrants to houses is that households don’t equal immigrants. There’s a big disparity there.”
Hulchanski stressed the importance of making decisions based on distinguishing between households and homes, since “the 40 million people in Canada don’t live in 40 million houses.”
The current political focus on managing immigration to ensure affordability is “just another way of avoiding the real discussion, that we need systemic change,” he said.
“In this case, the solution would be saying we’re going to increase social housing from, say 4% to 16% of the mix, or 20% of the mix.”
As four million Canadians enter the homebuying pool between now and 2027, and immigration boosts potential buyers, the housing market is poised for resurgence. 📈
— Canadian Mortgage Professional Magazine (@CMPmagazine) November 20, 2023
Read more: https://t.co/8WJFAQYBfg#MortgageIndustry #HousingMarket #HomeSales #Homebuyers #MortgageBroker pic.twitter.com/Xu5slezFYT
Migration a wrench in the BoC’s current strategy
The unplanned influx of foreign students and temporary workers in 2023 is complicating the central bank’s task of managing inflation, according to Stefane Marion, chief economist at the National Bank of Canada.
The sheer scale of the new arrivals over the past year – surpassing 1.2 million people and propelling the population growth rate to 3.2% – has presented an unforeseen obstacle for the BoC in accurately assessing the full impact of its 5% benchmark policy rate, Marion said.
“No one has models calibrated for this type of population flow,” Marion said. “Canada is caught in a population trap that has historically been the preserve of emerging economies… We currently lack the infrastructure and capital stock in this country to adequately absorb current population growth and improve our standard of living.”
Marion added that while other central banks grapple with forecasting challenges stemming from pandemic-induced supply-chain shocks, the BoC’s situation is unique in that it is attempting to navigate these turbulences in the context of a population boom.
