Canada’s unprecedented population growth through immigration is placing considerable strain on its economic infrastructure, prompting economists from the National Bank to recommend a significant curb in immigration levels. Economists Stéfane Marion and Alexandra Ducharme have raised concerns, indicating that the country is currently in a “population trap,” unprepared for the rapid influx of new residents.
Over the past 12 months leading up to October, Canada has seen a staggering increase in its population by 1.25 million, predominantly fueled by international migrants, many of whom are temporary residents. This surge in population growth has far outpaced the country’s capacity in several sectors, most notably in housing.
Marion and Ducharme have pointed out a critical gap in the Canadian economy – the inability of housing construction to keep pace with the demand generated by new arrivals. This imbalance has led to increased pressure on the already tight housing market, exacerbating affordability issues and creating a bottleneck in supply.
Given these challenges, the economists argue for a more sustainable approach to population growth. They suggest limiting annual population growth to a range of 300,000 to 500,000 people, significantly lower than the current rate. This proposal aims to provide a respite for the economy, particularly the real estate sector, allowing it to adjust and better accommodate the needs of a growing population.
This recommendation has far-reaching implications for the real estate market in Canada. A moderated approach to population growth could ease the pressure on housing supply, potentially stabilizing prices and improving affordability in the long term. However, it also raises questions about the broader economic impact, including labour market dynamics and the country’s demographic profile.
As Canada grapples with these complex issues, the real estate sector remains at the forefront of the conversation. Stakeholders in the industry, along with policymakers, will need to carefully consider the balance between population growth and economic sustainability, ensuring that the housing market can efficiently meet the needs of both current and future residents.
