Does Canada have the housing capacity to accommodate 500,000 immigrants a year by 2025 as Justin Trudeau’s government wants?
No, really not nowadays!
Here’s the problem. Statement by Stéfane Marion, chief economist and strategist at National Bank Financial: “The federal government’s decision to open the floodgates to immigration during the most aggressive monetary tightening cycle in a generation has led to a record-breaking imbalance between housing supply and demand.”
In testament to this, the working-age population (aged 15 and over) increased by 238,000 people in the second quarter, according to Statistics Canada.
Stéfane Marion, chief economist and strategist at National Bank Financial. Photo from the National Bank website
“It’s the largest quarterly increase on record,” Marion says, adding that the historical norm is 82,000 per quarter.
So what we’re talking about here is a Q2 increase that’s almost three times “normal”.
Imbalance between supply and demand
What was the quarterly increase in housing starts in the second quarter of 2023? There are 62,000 residential units across the country.
The ratio of housing starts to working-age population growth is 0.26 (62,000 housing starts / 238,000 more people).
That ratio has dropped to unprecedented levels, less than half its historical average of 0.61, according to Marion.
In order to meet the demand for housing, developers would have to start building 144,000 units per quarter, specifies Stéfane Marion. This equates to 576,000 on an annual basis, double the all-time best effort.
In these trying times, with pressures mounting on housing affordability across the country, National Bank Financial’s Chief Strategist has concluded: “We believe Ottawa should revise its goals on immigration so that supply can keep up with demand.” . »
In Quebec
The imbalance between housing starts and the quarterly growth of the working-age population (aged 15+) is widespread in all provinces.
In Quebec, the population aged 15 and over increased by 27,600 people in the second quarter.
The quarterly ratio housing starts/growth of population aged 15 and over is 0.30 in the second quarter. This is slightly better than the Canadian ratio of 0.26. However, the fact is that at 0.30 it is still only half the historical average.
12 month growth
From June 2022 to June 2023, a year from now, the working-age population across Canada increased by 704,100 compared to 252,071 housing starts, according to the Canada Mortgage and Housing Corporation (CMHC).
During the same 12-month period, the population of people aged 15 and over in Quebec increased by 97,700.
The number of residential units started is 43,834.
