How Will Canada’s Immigration Levels Plan Impact Housing & Rentals?
In case you didn't know Canada has a population problem, not only does it have one of the lowest birth rates in the world but is also home to one of the world's oldest populations. A country's population growth rate has a direct impact on its labour force and thus economy by extension. This is why it's not surprising that Canada experienced a 1.5% growth in its labour force, while the global average stood at 1.7%, and its GDP growth of 1.5% fell short of the global average of 3.2% in 2022.
It is also important to note that sluggish economic growth poses a challenge for Canada in generating the necessary tax revenue to sustain vital social services like education, healthcare, and other key sectors that contribute to the nation's overall quality of life.
Just to give you an idea of how bad the situation is by 2030, around 9 million Canadian baby boomers will hit the retirement age of 65. This means there will be fewer people working at a time when healthcare costs are going up. In response to this impending challenge, Canada has taken proactive measures by steadily increasing its immigration targets for more than three decades and the immigration levels plan is just the next step in these measures.
Canada's Immigration Levels Plan for 2024-2026 is designed to support economic growth, reunite families, and respond to humanitarian crises. The plan targets the admission of 485,000 new permanent residents in 2024, 500,000 in 2025, and 500,000 in 2026. These levels are the highest in Canadian history.
The plan prioritizes economic immigration, with a goal of welcoming 60% of new permanent residents through economic programs in 2024-2026. This includes skilled workers, entrepreneurs, and investors. The plan also targets the admission of 24% of new permanent residents through family reunification programs and 16% through humanitarian and compassionate programs. The goal is to address labour shortages, boost economic growth, and enrich Canada's cultural diversity.
The Impact on The Housing Market
Canada's immigration levels plan for 2024-2026 is expected to have a positive impact on the housing market.
Increase demand for housing: The influx of new immigrants will increase the demand for housing, which could lead to higher prices in the short term. However, in the long term, it is expected to stimulate the construction of new housing units, which will help to alleviate the housing shortage.
Boost the economy: Immigration is a key driver of economic growth in Canada. New immigrants bring new skills and ideas, and they start businesses and create jobs. For example, in 2023, immigrants accounted for 30% of all new businesses started in Canada. This economic growth is expected to lead to higher wages and increased spending, which will further support the housing market.
Increased investment in rental housing: The increase in demand for rental housing is expected to attract more investment in the rental market. This could lead to the construction of new rental units, as well as the renovation and conversion of existing buildings into rental units. This would increase the supply of rental housing and help to stabilize prices.
Diversify the housing market: Immigrants come from a variety of backgrounds and cultures, and they have different housing needs. This diversity is expected to lead to a more diversified housing market, with a wider range of housing types and sizes available.
This Is A Good Thing For Everyone
Canada at the moment is right in the middle of a housing crisis and to add more immigrants into the mix of home supply shortages could sound counterproductive, but it is not. Here's why.
In 2022, Canada issued 267,000 building permits, up from 245,000 in 2021. This represents a 9% increase in building permits year-over-year. It also started construction on 227,000 new homes, up from 205,000 in 2021. This represents an 11% increase in housing stats year-over-year. Canada has also plans to build 3.5 million new homes by 2030. In 2022, the government also announced a $10 billion investment in new rental housing construction, which is expected to create over 100,000 new rental units over the next five years.
These points demonstrate the Canadian government's readiness to address the housing needs of the incoming population surge, ensuring increased housing availability for all, not just immigrants. While initial rental and home prices may rise, long-term affordability is expected to improve with greater employment and income opportunities. Notably, investors stand to benefit significantly. According to the Canada Mortgage and Housing Corporation's 2023 Rental Market Report, 30% of rental properties in Canada are currently occupied by immigrants, up from 27% in 2022. With the expected immigration surge, investing in rental properties now could prove highly profitable in the future.