Closing the Gap Between Immigrant-Driven Housing Supply and Demand Part I
Immigration is on the rise and significantly contributing to Canada’s population and economic growth. But where will newcomers live when they arrive in Canada? How can we close the gap between immigrant-driven housing supply and demand? In this two-part blog series, we’ll explore how immigration impacts the Canadian economy, the lack of housing supply, and how big data can help Canadian groups address this significant challenge.
Immigrants have consistently played a vital role in nation-building and positively contributing to Canada’s unique economic and culture. In fact, Canada’s Century Initiative, a charity aiming to grow the Canadian population to 100 million by 2100 to meet economic growth targets, is largely focused on achieving this through immigration. Yet, as more immigrants arrive in Canada and sustain economic growth, concerns about increased housing demand, lack of housing, and the gap between housing and services are increasing. Without policies and solutions in place, higher levels of population growth are sure to outpace satisfactory housing supply.
Over the next few decades, Canada’s population and economic growth will be dependent on immigration. In 2019, immigration accounted for 79% of population growth as fertility rates dropped; these rates are expected increase as deaths exceed births.
And, over the next two years, it is anticipated that there will be about 1.2 million new arrivals or over 400,000 arrivals per year. This target will likely be increased with notable voices and institutions calling for the population to reach 100 million by 2100 to maintain Canada’s economic growth and competitiveness.
Herein lies the problem: with significant changes to Canada’s yearly population growth, which is only expected to continue to grow, there is a growing divergence between housing supply and demand. This challenge is amplified by the effect newcomers have on the housing and rental market. Estimates suggest that newcomers account for more than 20% of the housing market, purchasing 21% of homes.
When considering homeowner ownership rates, 74% of newcomers rent in the private rental market with only 39% being able to own their home within their first five years. Yet, there is a clear desire for homeownership among all immigrant groups; established immigrants have a 70% homeownership rate notwithstanding racial differences.
Immigrant-driven housing is creating demand. But to what extent is supply meeting that demand?
In part two of this blog series, we’ll dive into the housing supply challenge and discuss what innovative solutions can help close the gap between supply and demand.