Desjardins’ reports on how immigration will affect the Canadian housing market.
Desjardins has released a report analyzing the economic impacts of the federal government’s increased immigration targets.
The study finds that the large scale of planned immigration will lead to higher real GDP growth at the national level and in all Canadian provinces. Consequently, according to the report, increased immigration will affect Canada’s housing market by likely making the supply of housing insufficient for preventing an increase in housing prices, therefore compromising housing affordability across the country.
Historically, a large portion of immigrants have settled in Ontario and British Columbia, where housing affordability has already been a concern, even prior to the COVID-19 pandemic. Desjardins’ analysis shows that increased immigration is likely to boost housing prices and further erode affordability in those provinces.
The report also notes that the Prairie provinces (Alberta, Manitoba and Saskatchewan) have historically had the most success with integrating immigrants. These provinces typically have the most affordable housing markets in Canada and are expected to see affordability increase more than in other parts of Canada by the end of 2024. Desjardins’ report suggests that if a greater share of immigrants were to settle in the Prairie provinces, it would put less pressure on housing prices and affordability in regions where this is already a concern. Further, if the number of immigrants choosing to settle in the Prairie provinces returned to its 2016 numbers, the decrease in home prices could offset the upward effect caused by an increase in immigration.
You can read more about Canada’s immigration targets and data here.
Boost in home building
The impact of higher levels of immigration on housing prices can be offset by an increase in the number of homes built across Canada, regardless of where newcomers decide to settle. In fact, estimates from the Desjardins report suggest that the number of housing builds would have to increase immediately by almost 50% across Canada and remain at that level through 2024 to offset the price increase caused by the surge in immigration.
A 50% increase in housing developments is equivalent to about 100,000 more homes being built annually in 2023 and 2024, which would be the highest level of housing builds in Canadian history.
The benefit of increased newcomers to Canada
According to Desjardins, while the increase in newcomers is likely to increase housing prices, it should not be a reason to curb immigration. Instead, it should be a catalyst to reduce barriers to Canada’s ability to build more housing.
The report concludes by discussing why immigrants greatly contribute to the Canadian economy. As Canada’s natural population is aging, it is vital to add young, capable workers to the Canadian labour force through immigration. Desjardins notes that turning away young, skilled workers from immigrating to Canada rather than truly addressing this country’s issues with a lack of available housing would ultimately work to Canada’s economic and social detriment.
As stated by the report from Desjardins itself, “the contribution of immigrants to the Canadian economy well outweighs their impact on the housing market.”