Canada is facing a pressing housing crisis, with increasing home prices and affordability challenges. Many are wondering if the influx of immigrants is contributing to this crisis.
Is immigration contributing to Canada’s housing crisis? Let’s dive in the details:
The Housing Crisis in Canada: A Closer Look:
The Canada Mortgage and Housing Corporation (CMHC) projects a need for over 22 million housing units by 2030 to make homes affordable for all Canadians. This is 3.5 million additional units to the current national housing plan.
Is Immigration to Blame for the Crisis?
Some fear that Canada’s record-high immigration levels are driving up housing demand, reducing supply, and causing unaffordable prices.
However, government officials and economists argue against a direct link between immigration and the crisis, urging a balanced perspective.
Affordability Is the Key Issue:
Affordability main problem in the housing crisis. According to the Canadian Real Estate Association (CREA), the average cost of a home stands at $668,754, marking a 6.3% increase from the previous year.
This pricing surge puts homeownership out of reach for many, including both newcomers and locals.
These figures become even more daunting in provinces such as Ontario and British Columbia, where newcomers often choose to settle. In these regions, home prices climb to $856,269 and $966,181, respectively.
Understanding the Root Causes:
The Royal Bank of Canada (RBC) disputes the idea that immigrants are solely to blame for rising home prices.
RBC’s report points to construction costs as a significant factor, attributing the 51% price index increase since 2020 to skilled labor shortages, supply-chain challenges, and increased input costs.
Government Continues To Increase Immigration:
Canada aims to welcome 500,000 new permanent residents annually by 2025, believing that immigration is essential for tackling the housing crisis and other labor shortages.
Government officials stress the need to continue building the national labor force to address the housing situation effectively.
Many people, including newcomers and Canadians, are worried about housing. Canada’s Minister for Housing and Infrastructure, Sean Fraser says limiting the number of newcomers to Canada is not the answer to increasing housing and driving down cost.
Speaking with CBC last month, Fraser said that continuing to build the national labor force is important to solving the crisis.
“When I talked to developers, in my capacity as a minister of immigration before today, one of the chief obstacles to completing the projects that they want to get done is having access to the labor force to build the houses that they need,”Canada’s Minister for Housing and Infrastructure, Sean Fraser
Canada’s new immigration minister, Marc Miller agrees. He has said that immigration can act as a solution to Canada’s most pressing issues such as housing, in addition to the current shortage of healthcare workers in the country.
“Just putting a hard cap, which got a lot of public play over the last few days, is not the only solution to this,” he said.Immigration Minister Marc Miller
Canadian economists also suggest that allowing more people to move to the country could help address the problem of not having enough houses. According to a report from the CHMC, the housing issue is mostly caused by:
- It takes a long time to get approval for new housing projects after they are proposed.
- Not having enough skilled workers and problems with getting materials are making it more expensive and taking longer to build houses right now.
- If more houses are built, it might make the cost of building them go down.
However, a report from TD Bank says that Canada’s plan to bring in more immigrants might be happening too fast, especially because more people are being allowed to come and stay in the country temporarily.
“We estimate that a continuation of a high-growth immigration strategy would widen the housing shortfall by about a half-million units within just two years. Recent government policies to accelerate construction are unlikely to offer a stopgap in this short time period due to the natural lags that exist in adjusting supply.”Report from TD Bank
Balancing Immigration and Solutions:
While skilled newcomers can help, they are not the sole solution to the housing crisis.
Economists propose enhancing the domestic workforce by simplifying accreditation processes and addressing labor skill gaps.
Solutions include making daycare more accessible, encouraging women to rejoin the workforce, and supporting newcomers‘ licensing for skilled trades.
Despite short-term challenges from rapid population growth, both economists and the government are in the same page that Canada needs skilled workers to tackle its housing crisis.
While newcomers can help, empowering the existing workforce is also vital. Job vacancies in trades slow construction, but newcomers could bridge the gap. Both solutions take time, with accreditation and application processing needing several months.
Balancing immigration strategies with domestic workforce development can pave the way for a more affordable and sustainable housing market.