To Fix Canada’s Housing Crisis, Fix Canada’s Immigration Policy

Commentary

On all sides of the aisle, Canada’s political class has started to acknowledge that immigration plays a role in this country’s housing woes.

While this admission is a good initial starting point, restoring housing affordability will only begin in earnest when we grapple with how unsustainable Canada’s immigration levels have been of late. When you dig into the numbers, it becomes clear that major immigration reform is needed that goes beyond the measures already put in place by the federal government.

A new report from the Aristotle Foundation reveals the staggering reality of the significant role that unsustainable immigration levels have played in Canada’s housing crisis throughout the last decade. In 2000, the percentage of Canada’s population composed of non-citizens (international students, foreign workers, permanent residents, and asylum seekers) was 2.1 percent, rising gradually to 3.5 percent in 2015. From there, it rose rapidly to 9.1 percent in 2023.

The percentage of non-citizens increased more than 5 percentage points in eight years, and this had concrete effects on Canada’s real estate market by inflating housing demand. From 2000–2015, immigration significantly outpaced new housing construction just once—in 2000. But the immigration–housing ratio reached two-to-one in 2015, three-to-one in 2021, four-to-one in 2022, and five-to-one in 2023. Simply put, by 2023 five immigrants were being welcomed for each new housing unit started.

But wait, it gets even worse. Native-born citizens and long-term immigrants are more settled, and thus much more likely to own their home; only 20 percent are renters. The opposite is true for newly arrived immigrants, of whom 60 percent are renters. Newcomers typically rent for the first 5 to 10 years after arrival as they establish themselves and save up for a down payment. This means that the pressure placed on Canada’s housing market by immigration is impacting renters disproportionately.

Renters are a group already composed of some of the most vulnerable subsets of Canada’s population. Of the 5 million tenant-occupied buildings in 2021, 22 percent were occupied by seniors. Because seniors are often on fixed incomes, rent spikes hit them particularly hard. Young people starting their careers are also likely to be renters, and some are cracking under the stress of meeting rising payments. An Angus Reid poll found that 34 percent of young Canadians are considering leaving the country to find affordable housing.

To make matters worse, the Aristotle Foundation report found that—at the same time as housing demand is at a historic high due to immigration—housing supply is slowing. From 2021–2023, housing starts declined from 271,198 to 240,267.

The kind of housing being built is also changing. In 2000, 61.8 percent of new housing came in the form of single-family detached homes. By 2022, single-family homes accounted for just 31.7 percent of new housing. Apartments, which on average have fewer bedrooms than single-family homes, now account for over half of new residential construction. Not only is demand high and new supply slowing, but the type of supply being created is capable of housing fewer people.

The report concludes that Canada’s immigration policy is at present “too much of a good thing,” and argues that “immigration in most categories should be reduced significantly” in order to “moderate demand in the housing market and reduce the upward pressure on rental costs.”

This Aristotle Foundation’s closing argument is a sentiment shared by most Canadians. The government’s modest 21 percent cut in permanent resident admissions in 2024 was supported by 78 percent of Canadians, according to a Nanos survey. A recent poll by the Association for Canadian Studies and the Metropolis Institute found that, even after the permanent resident cut, 58 percent of Canadians feel that immigration remains too high. This belief was shared by a majority of Canadians in all age groups, all regions surveyed, and both white and non-white respondents.

There are some indications that even the modest immigration restrictions put in place by Ottawa over the course of 2024—caps on foreign workers and international students, as well as the permanent resident admissions reduction—may already be softening demand in the rental market. According to the latest monthly National Rent Rankings released by rentals.ca, year-over-year rent has declined for the fifth consecutive month in February, dropping 4.8 percent.

This is in line with an RBC report that predicted back in November that lower immigration levels would ease rent demand over the coming year. That being said, the National Rent Ranking show that, even after five months of consecutive rent decline, Canada’s average rent is still $2,088. This is still painfully or even prohibitively expensive for many Canadians, particularly seniors, students, young families, and newly settled immigrants.

The action that Canada has started to take in aligning immigration levels with housing capacity should be seen as merely a jumping off point. Much work remains to be done.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.

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