Don’t Blame Housing Woes Solely on Immigration, Minister Says

Minister of Housing, Infrastructure and Communities Sean Fraser answers a question in the House of Commons during question period on Parliament Hill in Ottawa on Sept. 18, 2023. The Canadian Press/Sean Kilpatrick

Canada’s rising immigration numbers are not the only factor causing the country’s housing crisis, says Housing Minister Sean Fraser.

“One of the things that’s really important for Canada’s social and economic well-being is that we don’t seek to attribute the very real challenges we’re having with housing exclusively to the issue of immigration,” Mr. Fraser said to members of the Standing Committee on Finance Feb. 13.

Mr. Fraser’s remarks came in the context of an opening question from Conservative MP Jasraj Singh Hallan, who asked why Mr. Fraser, then-immigration minister, had “ignored” a “dire warning” in 2022 that housing had not kept pace with rising population growth.

“No one ignored any warnings,” Mr. Fraser continued. He then brought up other warnings that he said were raised at the time about the health care system’s sustainability and the inability to construct homes without access to talent.

Mr. Fraser responded to a news report in mid-January indicating that his government received internal warnings two years prior about the effects of high immigration levels on housing affordability.

“I don’t think anybody needs a briefing note to understand that having more people in the housing market impacts the housing market,” he said during a press conference in Halifax on Jan. 15.

The Canadian Press disclosed the previous week that Immigration, Refugees and Citizenship Canada, Mr. Fraser’s former department, had put together an analysis to guide the new immigration targets for 2023 to 2025, revealing through an access to information request that population growth outpaced the increase in housing units. Despite this, the Liberal government decided to raise immigration levels.

Mr. Fraser justified the targets by clarifying that they refer to the admission of permanent residents, many of whom are already residing in the country. He argued that the significant strain on housing primarily stems from temporary residents, including foreign workers and international students.

At the Feb. 13 meeting, Mr. Fraser detailed what he believes to be influencing the current high housing prices in response to a question from Liberal MP Yvan Baker.

Mr. Fraser said the challenges in housing affordability can be traced back to decisions made in the late 1980s and early ‘90s, involving cuts to government-funded affordable housing programs. This has led to a 30-year period of underinvestment by both Liberal and Conservative governments.

Efforts to address these issues began in 2017 with the introduction of the National Housing Strategy, which aims to invest in affordable housing for low-income families and increase the supply of affordable and cooperative homes, according to Mr. Fraser.

Current market pressures, he pointed out, include changes in interest rates making housing less affordable, a buying frenzy in certain communities, notably by Ontarians during the pandemic, and reduced vacancy rates that affect both rental and homeownership markets.

Finally, Mr. Fraser noted that the increased population in some areas, driven by temporary residents like international students, has compounded these issues. The combination of long-term underinvestment and recent market dynamics has created a “perfect storm” that significantly impacts the affordability of renting or buying a home, he said.

Bloc Québécois MP Gabriel Ste-Marie raised the issue of conflicting reports suggesting either 3.5 million or 5 million new homes by 2030 would be needed to keep up with projected population growth.

“Whether it’s three-and-a-half million or 5 million, we still need to implement all of the measures that we’re dealing with,” responded Mr. Fraser.

A recent CIBC report has declared the Canada Mortgage and Housing Corporation’s (CMHC) estimate that 3.5 million new homes are necessary by 2030 for maintaining affordability as “already obsolete.”

The CMHC projection, based on a population of 38.9 million, falls 1.2 million short of the actual population, CIBC pointed out. Instead, CIBC argued that about 5 million new homes must be constructed by 2030 to address the housing shortage. CMHC’s 2022 report indicated Canada was on track to build 2.3 million new homes by 2030, but this number still did not meet the required housing units.

The average asking rent for all residential property types in Canada reached a record high of $2,178 in December 2023, marking an 8.6 percent increase from December 2022, reports Rentals.ca. Over the past two years, asking rents in Canada surged by 22 percent, or an average of $390 per month, following an 8.6 percent increase in 2023, a 12.1 percent increase in 2022, and a 4.6 percent increase in 2021.

The Rentals.ca report highlights that the rental market in Canada is expected to remain undersupplied but become somewhat more balanced in 2024, with rent growth predicted to align with the five-year average of approximately 5 percent.

Factors such as a slowing economy, a decrease in non-permanent residents, and improved homebuying activity due to declining interest rates, along with a rise in apartment completions and tenant turnover, are anticipated to add more supply to the market and help moderate rent increases, indicates the report.