A new report recently issued by Desjardins suggests that housing affordability is unlikely to return to Toronto anytime soon. According to the report, which predicted three possible outcomes for Toronto’s future housing market, not even the worst-case scenario should bring home prices sufficiently down in the city. Although the report pertains specifically to Toronto, some of Canada’s major cities have also been facing housing challenges. How’s that related to immigration? Considering the country’s ambitious immigration targets to welcome 500,000 foreign nationals per year by 2025, as well as Canada’s incentives for employers to hire temporary foreign workers, many have been debating if these policies are making the Canadian housing problem even worse.
Immigration can indeed have an impact on housing markets in Canada. When a significant number of immigrants arrive in specific areas, it can increase the demand for housing, potentially leading to rising property prices and rental costs. This can create affordability issues for both newcomers and existing residents. However, immigration is also crucial for the Canadian economy. The country is suffering with severe labour shortages in various essential sectors, and immigration-friendly policies aim to supply the demand for these occupations and keep Canadian companies in business. Moreover, most foreign nationals that arrive in Canada are educated and skilled individuals who can contribute to the country’s development.
The housing problem’s roots are not easily detectable. A report by the Royal Bank of Canada (RBC) confirms that the housing shortage is largely due to a higher residential construction price. Ironically, the report suggests that a shortage of skilled workers in the construction sector is one of the factors that are driving prices up, as the few available employees are seeking higher wages. Another possible contributor is the rise of short-term rentals such as Airbnb’s, which have made long-term rental prices more expensive.
To address the problem, the Canadian government has implemented policies and initiatives aimed at managing housing affordability and availability. Most notably, Canada has posed a ban on foreign property buyers. Starting on January 1, 2023, only Canadian corporations, citizens, permanent residents and certain foreign nationals (including some temporary foreign workers) are able to purchase and secure a residential property. This is an important measure to protect housing affordability as many properties in Canada had been acquired by foreign investors who did not necessarily have any ties with the country, which drastically increased the price of housing.
Most recently, Canada’s former Minister of Immigration and current Housing Minister Sean Fraser mentioned the country could be considering a cap on the number of study permits being issued every year as one of the measures to solve the housing crisis. The number of international students continues to rise rapidly, and some schools are believed to be welcoming more students than they are able to adequately support. As such, we believe monitoring the learning institutions to ensure the international students they are bringing each term have a place to live could be a more effective measure to address the housing issue than the study permit cap. Also, considering the international student program is crucial for Canada’s economy, the cap could result in other issues, such as more severe labour shortages, etc.
In conclusion, although the Canadian federal government is trying their best to tackle the housing problem by introducing the foreign property buyers ban and other measures discussed above, increasing housing affordability is not a simple task and demands more effective measures. Additionally, provincial and municipal governments also have a role in managing housing issues within their jurisdictions, and they must also approach the issue.
Further, blaming immigration alone for a possible housing crisis seem to be too simplistic. Nevertheless, the importance of reflecting on different solutions to the issue so that both new and existing residents of Canada can enjoy a high quality of life is becoming a matter of utter importance and that may include changes to immigration policies!