The different provinces that immigrants ultimately settle in will determine the effect on Canada’s housing market and prices, says the report.
High Prices
Regardless of where new immigrants move to, Canada will have to immediately start construction of about 100,000 more houses than the baseline on average in 2023 and 2024, which would “lead to the highest level of housing starts in Canadian history.”The report notes that the rate at which immigrants are arriving in Canada is outpacing the country’s ability to house newcomers. If there are no new government policies to accelerate homebuilding, it says, prices will rise quickly in 2024, and fewer Canadians will be able to buy a home.
Canada has been building houses at close to record rates since the start of COVID. The report cautions that blaming immigration solely for a spike in housing prices would be inaccurate, given that Canada is having a challenge building houses on a sustained basis.
The report suggests barriers such as “exclusionary zoning and the use of heritage designations” are often cited as the reason for higher home prices, lower density and urban sprawl, along with development fees which municipalities use for revenue.
The report also notes the problems of labour shortages and supply issues. It says that while a surge in new immigrants will push home prices higher and erode affordability, if the government reduces housing red tape, more young immigrants will enter the labour force and offset Canada’s aging population.
“Canada needs talented, young immigrants to increase productivity and offset the economic and fiscal drag from aging,” states the report.
“Economic immigrants are more likely to be employed and have higher earnings than native born Canadians, thereby raising Canada’s economic potential. Turning them away because of an inability or unwillingness to build more housing would leave Canada worse off.”
The federal government plan sets targets for immigration to 465,000 people per year in 2023, 485,000 in 2024, and 500,000 by 2025.