Canada anticipates that increased immigration will stimulate economic growth and alleviate a rapidly deteriorating post-pandemic labour crunch, however, new migrants may add fuel to a red-hot housing market that the central bank has alerted which has been fueled by a “sudden influx of investors.”
According to a government source, Prime Minister Justin Trudeau’s administration is on track to meet this year’s goal of 4,01,000 new permanent residents and is planning to revise next year’s target of 4,11,000.
In the face of a deteriorating fertility rate, which reached a historic low last year, Canada’s previous governments have depended heavily on immigration to steer economic expansion. With the pandemic forcing ageing Canadians to retire early, attracting skilled immigrant workers has become more essential. Furthermore, the country seeks high-skilled immigrants who bring in revenue and earn sufficient enough to compete for desirable housing.
“Canada needs immigration to create jobs and drive our economic recovery,” Immigration Minister Sean Fraser told Reuters. “It’s not just that one in three Canadian businesses are owned by an immigrant, but also that newcomers are helping to tackle labour shortages“.
Housing prices have skyrocketed as a result of low-interest rates and a lack of supply. Another factor, particularly in the pre-pandemic period, was migration. More new immigrants are expected now that most borders have reopened. Real estate prices have contributed to inflation reaching its highest level in 18 years. The government intends to cut housing costs which will take time to implement, and some policies may increase demand, according to economists.
“It is a conundrum of the effect of immigration on housing costs,” said Stephen Brown, senior Canadian economist at Capital Economics. “Still, ongoing construction and the need for labour justify more immigration. Canada has reached a point where the labor force will “flatline” without immigration”.
According to official data, job openings in Canada have more than doubled this year. Because of a labor shortage in manufacturing, the Canadian Manufacturers and Exporters Association has asked the government to double its objective for economic class immigrants by 2030.
Since PM Trudeau took office in November 2015, the standard home price has increased by 77.2 per cent. The administration intends to present a housing package to parliament, which will include a CAD $4 bn (US $3.2 bn) fund to help the country’s largest cities accelerate housing plans.
Immigrants, as per Statistics Canada, prefer to buy in large urban areas such as greater Toronto and Vancouver, where home prices have risen above C$1.12 million. According to realtor data, the average home in Canada now costs CAD $7,62,500 (UD $6,00,299).
According to Zillow, the average home in the United States is worth $3,12,728. Sudden price increases are expected to decelerate next year, though Reuters polled analysts expect Canadian home prices to rise 5.0 per cent in 2022, making them less affordable.
The government fund’s goal is to build 1,00,000 new “middle-class” dwellings by 2024-25, and the money will go to municipalities that demonstrate they can expedite construction. Analysts say this indicator could be beneficial, but they are opposed to some of the other measures in the housing package since they would drive up demand even further.
The Peel Region, which is part of the Greater Toronto Area, welcomed approximately 45,000 immigrants annually, but this ceased during the pandemic due to travel restrictions, according to real estate broker Jodi Gilmour.
“Right now we are seeing a rush of buyers trying to beat the two things that are going to change their position going into 2022, which are rising interest rates and competition from immigrants,” she said.