Emblemic of the “undercounting” is that the Immigration Levels Plan does not include temporary residents (workers and students), an oversight that many are noticing given the rapid rise in their number over the past 20 years.
Housing availability and affordability is the most obvious Achilles Heel of the government’s approach but there healthcare and infrastructure are also significant:
Canada’s explosive population growth from immigration is causing rents to surge in its biggest cities. And there’s another problem: The country isn’t even properly counting the number of people who need homes.
Prime Minister Justin Trudeau’s government plans to welcome 465,000 new permanent residents this year, and increase the annual target to half a million by 2025. But those often-cited numbers understate the pressure on the country’s limited supply of housing —because they don’t include a wave of foreign students, temporary workers and others with non-permanent visas.
The country actually had close to 1 million international arrivals last year, according to an analysis by Canadian Imperial Bank of Commerce that’s based on other data, including visas. It will probably accept a similar number this year, said Benjamin Tal, the bank’s deputy chief economist.
Apartment Rents Are Soaring in Canada’s Cities
Rent increases for two-bedroom apartments, year-over-year
As a result, Canada is experiencing its fastest population growth since the 1970s, and apartments have become extremely hard to find. The vacancy rate on rental buildings is below 2%, the lowest since 2001. In Vancouver, it’s less than 1%. The situation is made worse by rising interest rates that have made buying a home unaffordable for many people, pushing them into the market for rental properties.
“We’re underestimating how many people are here and how many people are requiring real estate,” Tal said in an interview. “If you don’t have official numbers showing the demand accurately, municipalities making allocation for housing based on those are missing the magnitude of the need.”
The consequences of that undercounting can already be seen, Tal said. Rent inflation was nearly 6% in the last two months of 2022, accelerating from 3.1% early last year.
International Migration to Canada Spikes
Landlords in many provinces face legal restrictions on how much they can increase rents on existing tenants. But when a two-bedroom apartment is vacated, the average increase for the next tenant is 18.2%, according to Canada’s national housing agency.
Local government red tape is one reason more apartments aren’t being built, Kenney said, which means housing policy is out of alignment with Trudeau’s approach to immigration.
“Canada was at a point for many, many years where we had housing affordability and you could have open immigration policy. There were ample homes for all,” Kenney said. “The combination of turning up the volume on the immigration front, and turning down the volume on development, has put us in really bad shape.”
Housing costs are causing some to uproot from the priciest cities in search of cheaper locations. Toronto gained people from international migration but also saw a net outflow of nearly 100,000 residents to other parts of Canada in the 12 months ended July 1.
Toronto Sees Growing Outflows Amid Housing Crunch
Some are landing in Calgary and Edmonton, the largest cities in Alberta, which saw a significant increase in migration from other parts of Canada. “It’s rare to be able to find an empty apartment now, unless it’s new,” said Sam Kolias, CEO of Calgary-based Boardwalk Real Estate Investment Trust. “There’s lots of jobs here.”
A spokesperson for Immigration Minister Sean Fraser said the government takes housing into account when it sets immigration policy, and it’s a factor in who it allows in.
“In order to meet housing demands for those who have newly entered Canada, and the nation’s housing needs in general, we have taken great care to ensure our immigration plan selects individuals with the skills to build homes in Canada, and encourage them to settle in parts of the country that have housing capacity,” Bahoz Dara Aziz, Fraser’s press secretary, said in an emailed statement.
‘Get the Numbers Right’
CIBC’s Tal said it’s “misleading” to focus on the number of new permanent residents when calculating housing needs. And there are other quirks of Canada’s statistics-gathering process that may result in underestimating demand for places to live, he added.
It all suggests that “existing policy tools will easily fall short of addressing the current and future increase in housing demand,” Tal said in a report to investors. If there’s no change in how migration data are captured and debated, Canada may find it harder to absorb its rising number of immigrants, he said.
“The official numbers don’t tell you the story. When we think about the housing policy, a precondition is to get the numbers right.”
About Andrew Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.
About Andrew
Multicultural Meanderings 