Canada Population Growth Impact on Housing Market 2024

Key Takeaways:

Canada’s working-age population grew rapidly in early 2024, heavily straining the housing market and decreasing vacancy rates.
Major cities like Toronto, Vancouver, and Montreal saw significant population surges, exacerbating housing demand and rental prices.
Government measures aim to manage population growth, but immediate housing market pressures persist, requiring coordinated policy efforts.

Canada Population Growth Impact on Housing Market 2024

How Is Canada’s Population Growth Affecting the Housing Market?

What Are the Recent Trends in Canada’s Working Population?

In the first four months of 2024, Canada’s working-age population saw an extraordinary increase, setting new records. According to Statistics Canada, the country’s working-age population grew by 411,400 people. This represents a 47 percent increase over the same period in 2023, and nearly quadruples the average growth from 2007 to 2022. This rapid growth is putting a significant strain on an already overburdened housing market.

“With that kind of population growth, perhaps we’re going to see some resilience in home prices in the country,” said Matthieu Arseneau, the deputy chief economist at National Bank. “We expect the vacancy rate — already at the record low end for Canada at the end of 2023 — to decrease further, perhaps to be lower than or close to the one percent level.”

Why Is Population Growth Surging?

The dramatic increase in population can be attributed to multiple factors. Ottawa’s various plans to reduce population growth may have paradoxically prompted many individuals to migrate to Canada before these measures take effect. “We suspect that by announcing some measures down the road, perhaps you have a boom in demand in the short term because of that,” Arseneau noted.

How Are Major Canadian Cities Affected?

Major cities like Montreal, Toronto, and Vancouver are seeing an even greater surge in population. Toronto’s population increase from January to April 2024 was 67 percent higher compared to the same period in 2023. In Vancouver and Montreal, population growth this year more than doubled last year’s figures.

“Those are huge increases,” Arseneau said. “We know that those cities are the main entrances for immigration, which explains why it’s higher than the national average.”

What Measures Is the Government Taking?

The federal government has taken several steps to manage this rapid population growth. In January, Immigration Minister Marc Miller cut the number of international student visas by 35 percent. In March, he announced a first-ever cap on temporary residents, aiming to reduce their share of the overall population from 6.2 percent to around five percent.

In an emailed statement, Immigration, Refugees and Citizenship Canada (IRCC) stated, “While population growth through immigration increases demand for housing, infrastructure and services, it also contributes significantly to the supply of labor, including to the construction sector to build new homes and support the healthcare sector.”

For more information on these immigration measures, you can visit the IRCC’s official website.

How Is Population Growth Impacting the Housing Market?

Sales data released by the Canadian Real Estate Association showed a mix of trends, with slower sales keeping prices down while the number of homes on the market increased. However, the accelerated population growth adds pressure on housing affordability. “The affordability problem for first-time home buyers is already very acute,” Arseneau pointed out. “We are expecting rate cuts in the second half of this year. We doubt that’s going to improve affordability given the magnitude of the population growth.”

Is Rent Also on the Rise?

Yes, the demand for rental units is also intensifying. Increased population means more people are looking for rental properties, which are already scarce. This demand is driving rental prices higher, impacting the Consumer Price Index. Data released in April showed rent prices jumping by 8.5 percent in March. “That’s a difficult situation for the central bank to cope with — inflation coming from the housing sector,” said Arseneau.

What Are the Government and IRCC Doing to Address These Housing Challenges?

The IRCC’s statement acknowledges the “acute challenges related to housing” and highlights their “pursuing strategies that support Canada’s continued need for immigration while leading the national effort to solve Canada’s housing crisis.”

“We need all levels of government at the table with us on this,” the statement continues. “At the federal level, we are aligning our immigration policies with measures taken to address housing and infrastructure challenges. The 2024-2026 Levels Plan strikes the right balance between supporting Canada’s economic prosperity, staying true to our humanitarian tradition, and developing a more sustainable approach to levels planning with our partners.”

What Are Future Projections?

National Bank’s economists expect the working-age population to grow by three percent in 2024, exceeding the 2.3 percent rise in 2023. This rapid growth might taper off as government measures to limit population growth take effect. However, the impact of strong population growth in 2023 and 2024 will likely extend beyond 2025.

“I think that for the next five years in Canada, the big challenge will be to cope with this housing shortage that we have,” Arseneau mentioned. “It will take several years to alleviate pressure on the housing market given this population boom over two years.”

Conclusion

Canada’s rapid population growth is creating significant challenges for the housing market. The working population has seen unprecedented increases, especially in major cities like Toronto, Vancouver, and Montreal. While the government is implementing measures to control this surge, these steps may take time to be effective. The immediate consequence is an already strained housing market, facing further pressure with increased rental prices and a decline in vacancy rates.

Addressing these issues requires coordinated efforts from all levels of government, along with robust, sustainable policies. For those feeling the immediate impact, it’s important to stay informed about new measures and understand how these changes will affect both the housing market and broader economic stability.

For more detailed information on immigration policies and their impacts, visit the Government of Canada’s Immigration website.

Learn Today:

Glossary

Working-age Population: Refers to the segment of the population that is of age to work, typically between 15 and 64 years old. In the context of Canada, this group saw a significant increase in numbers in early 2024, impacting various economic sectors including housing.
Vacancy Rate: The percentage of all available rental units in a housing market that are vacant or unoccupied at a given time. A lower vacancy rate usually indicates higher demand for rental properties, leading to increased rental prices.
International Student Visas: Permits issued by the government that allow foreign students to study in Canada. Recent reductions in the number of these visas are part of the government’s strategy to control population growth.
Temporary Residents: Individuals who are legally permitted to reside in Canada on a temporary basis, often for purposes like work, study, or as visitors. The government introduced caps to limit the number of temporary residents as part of its population management measures.
Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. The content specifically mentions how rising rent prices are contributing to an increase in the CPI, affecting overall inflation.

This Article In A Nutshell:

Canada’s booming population growth is straining the housing market. Working-age populace surged by 411,400, increasing pressure in cities like Toronto, Vancouver, and Montreal. Government actions aim to manage growth impact but challenges persist. Housing market strains endure with rising rental costs and decreasing vacancies. Future projections suggest sustained pressure.
— By VisaVerge.com

Disclaimer: If you use any information from this article, link back to the original article URL on VisaVerge.com. Thank you for respecting our content and giving proper credit.