Canadian Population Sees Greatest Gains Since Confederation

Houses for sale in Ottawa

The Canadian population sailed past the 40 million mark for the first time in history this summer and new data shows that the country continues to outdo itself, adding 430,635 people in the third quarter of the year alone.

That figure, which puts Canada’s population in the ballpark of more than 40.5M people, marks a 1.1% increase from July and represents the highest population growth rate in any quarter since the second quarter of 1957 when Canada’s population grew by 198,000 people, according to estimates from Statistics Canada (StatCan), released last week.

Within the first nine months of this year, the Canadian population surged by more than one million (1,030,378, to be exact), the government agency also said. Though estimates for the fourth and final quarter of the year are forthcoming, year-to-date population growth has already surpassed any increase observed over a full-year period since Confederation in 1867.

Unsurprisingly, immigration was almost wholeheartedly to thank for the population boost observed in the third quarter, with StatCan attributing 96% of the gain to international migration and just 4% to “natural increase,” or the difference between the number of births and deaths.

More specifically, Canada welcomed 107,972 immigrants in the third quarter. Year-to-date immigration inflow, at around 371,299 people, have reached close to 80% of the federal government’s target, which calls for 465,000 new permanent residents in 2023.

Spotlight On Housing Supply

Although StatCan noted that population gains from the aforementioned natural increases are expected to remain low in the coming years, gains linked to immigration are on track to surge further. The feds are aiming for 485,000 additionally permanent residents in 2024 and another 500,000 in 2025. For what it’s worth, the feds have said they will hold that target steady in 2026.

Even so, today’s housing construction realities should give policy-makers some pause. Data released earlier this month by the Canada Mortgage and Housing Corporation (CMHC) shows that housing starts plunged 22% between October and November. In urban centres — those with populations of at least 10,000 — total starts fell 23%, with multi-unit starts, which slid 27% in the month, to blame for most of that drop.

CMHC’s Deputy Chief Economist, Kevin Hughe, says that difficult conditions facing builders are just now starting to show in the numbers, and warns that housing starts will taper off further in the months to come.

Moreover, as Bank of Canada Deputy Governor, Toni Gravelle, highlighted in a speech delivered at the Windsor–Essex Regional Chamber of Commerce this month, Canada has not been effective in recruiting the skilled labour needed to ease structural supply issues and ramp up housing construction in a meaningful way.

“While Canada is welcoming more newcomers than ever, only about 3% of NPRs work in construction. By comparison, roughly 8% of the overall employed population works in construction,” he said.

“Canada also has an immigration pathway that includes qualified construction workers: the Federal Skilled Trades Program. But it accounts for just 0.1% of annual PR admissions, or 455 newcomers in 2022. At the same time, around 20% of Canada’s construction workforce is set to retire in the next decade.”

Gravelle also spoke to the relationship between immigration and inflation, noting that immigration-driven population growth has “added to the pressure” on shelter price inflation due to Canada’s existing housing supply challenges.

“Had builders been able to respond more flexibly to the increased demand, it would have helped reduce upward pressure on rent and housing prices,” he said.

Undercounted NPRs

Beyond the existing and emerging roadblocks to creating new housing supply, Canadian policymakers have habitually struggled to assess actual housing need.

This summer, CIBC’s Benjamin Tal wrote in length about non-permanent residents (NPRs) — including international students, short-term visitors, and temporary foreign workers — and asserted that “the official number of NPRs that is widely quoted and used for planning purposes undercounts the actual number of NPRs residing in Canada by close to one million.”

More specifically, Tal highlighted discrepancies between StatCan’s census, and its “more dynamic” quarterly and annual estimates of population growth. The 2021 census, for instance, indicated that there were 925,000 NPRs in Canada. In contrast, StatCan’s quarterly estimate put the count at 1.17 million, wrote Tal.

Although Statistics Canada has opted to revise its data on NPRs going back to 2021 in response to Tal’s report, certain issues with the counting method remain. A big one is that StatCan has no way of knowing whether or not temporary residents leave the country after their visas expire

“Many are awaiting an ‘invitation’ through the Express Entry Program. Most of the remainder, while eventually intending to return to their home country, are attracted to extend their stay given ample employment opportunities in Canada,” wrote Tal back in August. “The practical implication of that undercounting is that the housing crisis Canada is facing is actually worse than perceived.”

Even without accounting for those “overstayers,” StatCan’s data shows that the share of NPRs in Canada has spiked by 14% between July and October to 2,511,437. That rise marks the greatest quarterly increase going back to 1971 (when data on non-permanent residents became available) and is attributed to an uptick in the number of work and study permit holders (and, to a lesser extent, an increase in the number of refugee claimants).

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