Fresh data just released from the 2021 census shows Canada is the fastest growing country in the G7. Canada’s population jumped by 1.8 million people (5.2%) since the last census in 2016. Much of that is due to federal immigration policies.
Of course, immigration is needed to support continued economic prosperity, but the population boom is widely seen as the key reason for spiking home prices. It is basic, supply and demand. Ottawa hopes to bring in a record breaking 411,000 permanent residents in 2022, while 2021 ended with an annualized rate of housing starts at 260,567. That number is expected to decline this year.
“Household formation in Canada is very, very high…” “We’re not building dwellings, or housing units, fast enough for household formation,” says Peter Routledge, head of the Office of the Superintendent of Financial Institutions (OSFI), the federal, banking regulator.
The resale market is also incredibly tight with record high sales-to-new-listings ratios and record low inventories.
Many market watchers say regulation and red tape at the municipal and provincial levels are to blame. That argument is the cornerstone of a recent housing affordability report done for the Ontario government. Its 55 recommendations include several development-friendly changes.
On a long-term basis there is little doubt changes and simplifications are needed. But there are short-term realities to deal with as well. Simply put, the housing construction industry cannot respond to the rapidly rising demand quickly enough to satisfy it. Well known Canadian economist Robert Hogue noted recently that housing starts would have to triple to meet current demands.