Canada must build 50% more homes amid immigration: report
As Canada prepares to increase immigration levels, a new report says the country will need to build 50% more housing than was planned.
The report, published by economists from Desjardins on Monday, said that to keep up with the federal government’s immigration targets without dramatically increasing home prices, an additional 100,000 homes are needed. annually in 2023 and 2024.
“Increasing housing supply beyond normal demand will also relieve downward price pressure but will require extraordinary policy intervention and resolution,” the authors write. “Indeed, we estimate that start-ups would have to increase immediately nationally by almost 50% above our baseline and remain at that level through 2024 to offset the price increase. from increased federal immigration.”
Last fall, Ottawa unveiled plans to increase immigration to Canada, with a goal of 500,000 newcomers each year by 2025.
The report notes that the federal government’s target of 100,000 new housing units over the next five years falls short of the required 100,000 new homes annually. However, the Ontario government aims to build 150,000 new homes per year in the province with Proposition 23, also known as the More Homes Built Faster Act.
Ontario’s goal of 150,000 new homes a year is much higher than the 100,000 homes Desjardins says are needed nationally. If the province is able to meet this target, the report says this could have a “disproportionately offsetting effect on median house prices in Canada.”
The impact of immigration on housing affordability also depends on where newcomers decide to move to. If newcomers mainly move to the Prairies, the authors say this will ease pressure on house prices in areas where affordability has been stretched. Desjardins also said Prairies is expected to have “the best performing economy in Canada” and that more immigrants moving to these provinces “will support higher economic growth there and nationally. “
Since 2018, Ontario and BC have received the highest proportion of immigrants, despite being also the two provinces with the most affordable housing. If these provinces continue to receive the most immigrants, the report’s authors say this could “increase prices and erode affordability there and nationally.”
Reducing immigration to current levels between 2018 and 2021 will reduce the impact on house prices, the report added. However, the authors stress that higher levels of immigration are still essential to address labor shortages and that it is “wrong” to blame immigration as the main cause of rising house prices.
Rather than being seen as a reason to restrict immigration, it should instead act as a catalyst to reduce barriers to building more housing, the report said. immigration to the Canadian economy far outweighs their impact on the housing market.