According to a recent report from TD Economics, Canada’s housing shortage could worsen by 500,000 units in just two years if immigration continues at its current rate. The report highlights that Canada’s population grew by 1.2 million in the past year, more than double the pace of population growth in previous years. The federal government aims to welcome an additional 500,000 people per year by 2025 to address labor shortages and counterbalance the country’s aging demographic. However, the economists question whether this rapid increase in population is sustainable. Even before the influx of newcomers, the report suggests that Canada’s housing affordability was already projected to decline. If the high-growth immigration strategy continues, the housing shortfall could potentially widen by 500,000 units in two years. The report notes that recent government policies to accelerate construction are unlikely to alleviate the housing shortage within this timeframe. The National Bank of Canada supports these findings and suggests that the government should revise its immigration targets to allow housing supply to catch up with demand. A BMO analysis also indicates that housing prices typically increase by approximately three percent each year for every one percent increase in population. While the housing issues would exist regardless of immigration levels, Professor Mikal Skuterud from the University of Waterloo suggests that immigration likely exacerbates the problem. The Canada Mortgage and Housing Corporation estimates that 3.5 million more homes need to be built by 2030 to achieve housing affordability. Furthermore, the TD report highlights that social pressures are not limited to housing but extend to areas like healthcare and social support systems that are struggling to keep up with population growth. Skuterud emphasizes the need to shift focus from solely the housing market to the bigger picture and investments in overall capital, including business capital and social infrastructure, to ensure prosperity for Canada. He argues that Canada’s weak capital investment and reliance on low-wage temporary foreign workers hinder the country’s ability to leverage increased immigration to boost productivity. Skuterud also points out that the recent increase in positions approved for low-skilled temporary foreign workers undermines labor productivity and the living standards of the population. Fraser, the Housing and Infrastructure Minister, emphasizes the need to build more homes instead of closing the door to newcomers as a solution to the housing crisis. Conservative Leader Pierre Poilievre criticizes the Liberal government’s immigration strategy but does not directly address reducing immigration targets. He suggests that a Conservative government would base its immigration policy on employers’ needs, support for refugees, and family reunification.
TD: Immigration Pace in Canada Could Exacerbate the Housing Crisis
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