Population growth outstripping housing supply: report

While immigration counters the effects of an aging population on Canada’s economy, the impact on the housing market suggests the government should rethink its current targets, according to a research note from National Bank Financial (NBF).

In a new report, NBF said the latest jobs data from Statistics Canada revealed that Canada enjoyed robust population growth alongside strong labour force growth last month.

“In March alone, the working-age population expanded by 80,000 people,” it noted, adding that this pushed the first quarter total to 204,000.

“There is no precedent for a quarterly rise of this magnitude,” NBF said, noting that the U.K. population increased by 200,000 in a full year in 2022.

Increased immigration has been touted as an antidote to the damaging effects of an aging population, which is expected to weigh on growth and increase the strain on government finances in the years ahead.

However, NBF said that new home construction isn’t keeping up with the fast-growing population. It estimates that housing starts in the first quarter likely reached 57,000 units.

“At just 0.27, the ratio of housing starts to working-age population growth is the lowest on record and well below its historical average of 0.61,” it noted.

This combination of a lack of new housing supply along with strong population growth “will continue to put pressure on housing affordability in the coming quarters,” it concluded.

“Ottawa should consider revising its immigration targets to allow supply to catch up with demand,” NBF said.

Staff

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