Ottawa’s ambitious target to substantially lift the number of new immigrants has raised concerns about whether Canada has enough housing to accommodate them.
The housing shortage in this country is well known and governments on all levels have released plans to bolster the supply.
Canada Mortgage and Housing Corporation estimated in June that an additional 3.5 million housing units needed to be built by 2030 to achieve affordable housing for everyone living in Canada. That’s on top of the 2.3 million units it expected to be built by that time at current rates of construction.
“Canada’s approach to housing supply needs to be rethought and done differently,” CMHC deputy chief economist Aled ab Iorwerth said in the report. “There must be a drastic transformation of the housing sector, including government policies and processes, and an ‘all-hands-on-deck’ approach to increasing the supply of housing to meet demand.”
But what is that demand?
CIBC deputy chief economist Benjamin Tal suggests in a recent report that Canada’s actual increase in housing demand is far higher than official estimates.
Ottawa is aiming to increase the number of new immigrants by 75 per cent over pre-pandemic levels by 2025. But saying 465,000 new immigrants in 2023 does not mean net population growth due to immigration and thus demand for housing will rise by 465,000, he said.
Tal argues that it’s not the number of new immigrants that should be used to calculate housing demand, but the number of new people coming into the country from abroad. And these numbers, he says, have been vastly underestimated.
Amid the pandemic in 2021, about 70 per cent of new permanent residents were already living in Canada, and didn’t need housing.
In 2022 that share plunged to 42 per cent. Tal said officially the net increase in new immigrants in 2022 compared to the year before was 31,000 or 7.6 per cent. But because more of the immigrants came from outside of Canada the actual net growth in housing demand was 131,700 or 108 per cent.
Also, while the focus has been on new immigrants, non-permanent residents (NPRs) represent a larger share of new arrivals, said the economist. “Statistics Canada’s population forecast has underestimated NPRs over many years and by no less than 1000,000 in 2022,” he said.
The number of non-permanent residents coming into the country has swelled after COVID travel restrictions were lifted through student visas, work permits and the Canada-Ukraine Authorization for Emergency Travel program. The CUAET provides eligible Ukrainians with temporary residency and an open work visa for three years.
CIBC calculates that the number of non-permanent residents arriving in Canada grew from 258,000 in 2021 to 700,000 in 2022, a 170 per cent increase.
Altogether, permanent and non-permanent residents arriving from outside the country in 2022 approached 955,000, which represents “an unprecedented swing in housing demand in a single year that is currently not fully reflected in officials figures,” said Tal.
These trends are not likely to ease in 2023, and may intensify, said Tal. Almost 340,000 CUAET visa holders from 2022 have not yet arrived in Canada and hundreds of thousands more applications are waiting to be processed.
Reported plans by the federal government to waive eligibility rules for visitor visas to reduce its backlog would also add to demand.
“It’s not a stretch to suggest that the number of new international arrivals in 2023 might reach one million,” said Tal.
“This kind of inflow suggests that existing policy tools could easily fall short of addressing the current and further increase in housing demand.”