Rising new entrants to Canada drive home prices higher, hurting affordability: report

Canada needs 100,000 new homes a year to accommodate federal immigration plans, Desjardins report reveals

Canada needs to build an estimated more than 100,000 homes annually to meet the federal government’s latest immigration targets, according to a new report analyzing Canada. impact of increase Immigration to the local housing market.

Housing starts will need to jump almost 50% immediately and stay at that level through 2024 to offset rising house prices from immigration, Feb. 13 said. report According to Desjardins Economic Research.

“Increasing housing supply beyond the typical demand response would also remove pressure on prices, but would require extraordinary policy interventions and solutions.” Said Statement issued by Desjardins, a financial institution providing banking and insurance services.

The various provinces where immigrants end up settling will determine the impact on Canada’s housing market and prices, the report says.

“If these newcomers to Canada continue their recent migration trend, Affordability drops further in Ontario and British Columbia. However, when I move to a place, has historically done a better job of integrating immigrants such as the Prairie States, this The impact of increased immigration on housing prices.”

Looking at historical indicators, the report concludes that “supply is likely to be met poorly,” which has caused prices to skyrocket and affordability to fall across the country, especially since it is already In states with high prices.

If immigration follows the pattern of 2016 and relocates to the prairies, it would boost economic growth and reduce pressure on house prices and affordability in British Columbia and Ontario, report says. said. If more newcomers moved to the Prairie, home prices would be lower across the board, he said.

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Regardless of where the new immigrants go, Canada will need to immediately start building about 100,000 more homes than the baseline in 2023 and 2024 on average, which is “the highest level in Canada’s history.” It will lead to housing starts.”

This is far more ambitious than the federal government’s plans. The most recently discussed plan in budget 2022‘ said the report.

The report notes that the rate of immigrants arriving in Canada exceeds Canada’s capacity to accommodate newcomers. Without new government policies to accelerate housing construction, prices will rise sharply in 2024, and even fewer Canadians will be able to afford homes.

Canada is building homes in record time since the start of COVID. The report warns that blaming immigrants solely for soaring housing prices is inaccurate, given that Canada faces challenges to build housing sustainably.

Barriers such as “the use of exclusion zoning and heritage designations” are often cited as reasons for rising house prices, declining population densities and urban sprawl, along with development costs that local governments use for revenue, the report said. It is suggested that it will be issued to

The report also mentions labor shortages and supply problems. A surge in new immigrants will push up housing prices and undermine affordability, while saying if the government cuts housing bureaucracy, more young immigrants will enter the workforce and offset Canada’s aging population. increase.

“Canada needs talented young immigrants to boost productivity and offset the economic and financial burden of an aging population,” the report said.

“Economic immigrants are more likely to be employed and earn higher incomes than Canadian-born Canadians, increasing Canada’s economic potential. Keeping them away for a reason will make Canada even worse.”

Last year, Canada’s immigration reached 431,645, setting a new record. The country is set to have immigrants make up 30% of her population by 2036. In contrast, immigrants made up her 20.7% of the population in 2011.

Federal plans set immigration targets at 465,000 annually by 2023, 485,000 by 2024, and 500,000 by 2025.