Overlooked population growth is one huge factor why
Canada is facing a housing shortfall much larger than previously thought, with the Canadian Imperial Bank of Commerce (CIBC) indicating the country needs an extra five million homes by 2030 to tackle the growing affordability crisis.
This figure is a significant jump from the national housing agency's estimate of 3.5 million. CIBC economist Benjamin Tal pointed out that a major oversight has been the undercounting of non-permanent residents, leading to this stark discrepancy.
As the nation struggles with rising housing prices, the Canadian government has been rolling out policy after policy to boost housing supply, but the impact on the market has been minimal so far. The challenge is further compounded by Canada's aggressive immigration policy.
The situation is made even more difficult by high interest rates and a slowing economy. Data from December revealed a sharp 14% drop in the total value of building permits across Canada from the previous month, hitting the lowest point in over three years. This decline was particularly acute in the residential sector, where permits for multi-unit buildings saw a significant downturn.
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Much of Canada's recent population increase has been fuelled by non-permanent residents, such as foreign students and temporary workers. Despite recent measures to cap the number of foreign students, Tal suggests that continued growth from other types of non-permanent residents will still lead to around six million new people moving to Canada over the next seven years. This anticipated growth, on top of an already larger-than-expected population, means the country will have to ramp up its housing construction efforts well beyond what is currently planned.
Tal is calling for more accurate and comprehensive planning that includes non-permanent residents in housing forecasts and targets. Without such planning, he believes it's impossible to fully grasp the scope of Canada's housing needs.
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