Canada’s housing crisis has dominated policy discussions, with concerns over affordability and availability growing louder. The federal government’s recent decision to reduce immigration targets has sparked debates on its potential impact on the housing market. While the Parliamentary Budget Officer (PBO) acknowledges the move may narrow the housing shortfall, the effect may not be as significant as government projections suggest.
The PBO’s Perspective
In a report released on November 15, the PBO estimates that Canada needs to build an additional 1.2 million homes by 2030 to close its housing gap. The Liberal government’s revised immigration plan, which reduces annual permanent resident admissions from 485,000 in 2024 to 365,000 by 2027, is projected to decrease the housing gap by 534,000 units—or 45 percent—by 2030. This reduction reflects slower population growth and fewer new households being formed.
However, the PBO cautions that these figures may represent “upper-bound estimates.” The calculations assume that 2.8 million temporary residents will leave the country by 2027, as the government intends to limit renewals of work and study permits. According to The Canadian Press, the PBO expressed “significant risk” to these demographic projections, noting uncertainties in the behaviour of non-permanent residents, whose permits might expire without them departing Canada.
The federal government’s approach marks a significant shift in policy, aiming to curb Canada’s record population growth. Between January 2023 and January 2024, the population rose by 1.3 million, with 97.6 percent of the increase attributed to immigration, according to Statistics Canada. This influx has been a critical driver of housing demand, compounding the shortfall.
Government vs. PBO
While the PBO predicts a reduction of 534,000 units in the housing gap by 2030, the federal government anticipates a more substantial decrease of 670,000 units by 2027. This discrepancy stems from differing assumptions about factors like household formation and the geographic distribution of population changes. But the Financial Post said the government’s projections also operate on a shorter timeline, which may overstate the immediate effects of its revised immigration levels.
Immigration Minister Marc Miller defended the government’s strategy, asserting that immigration remains vital to Canada’s economic and social fabric. “Immigrants are not to blame for the housing crisis,” Miller stated. “These changes will make immigration work for our country so that everyone has access to the quality jobs, homes, and supports they need to thrive”.
Housing Target Challenges
Even with reduced immigration levels, Canada’s housing needs remain daunting. The PBO estimates that achieving equilibrium will require 2.3 million new housing units by 2030—an average of 390,000 homes annually. This target far exceeds the current pace, with housing starts declining to 224,000 units in 2023. Years of underinvestment in construction and surging population growth have exacerbated the shortfall, leaving Canada with some of the world’s most strained real estate markets, according to the Wall Street Journal.
Prime Minister Justin Trudeau’s government has set ambitious goals to double housing completions by 2031, aiming to add 3.9 million homes. However, this objective requires overcoming significant barriers, including skilled labour shortages in construction—a sector heavily reliant on immigrants. CBC News reports that pro-immigration groups have warned that reducing newcomer inflows could exacerbate these workforce shortages, further hindering housing development.
Policy Implications and Broader Concerns
While slowing population growth may alleviate pressure on housing demand, it comes with trade-offs. Non-permanent residents, including international students and temporary foreign workers, play vital roles in Canada’s economy. Critics worry that strict immigration policies could deter talent and harm sectors reliant on these workers, such as healthcare and construction.
Conservative Leader Pierre Poilievre has also advocated for immigration levels aligned with housing availability. “It’s very simple math,” he said earlier this year. “If you have more families coming than you have housing for them, it’s going to inflate housing prices.” Poilievre’s comments reflect a broader push for immigration policies that balance population growth with infrastructure and social service capacity.
A Dual Challenge
The government faces the dual challenge of addressing Canada’s housing shortage while maintaining a robust and inclusive immigration system. Although the PBO acknowledges that curbing immigration will narrow the housing gap, the underlying problem of insufficient construction persists.
As the debate continues, policymakers must navigate competing priorities: fostering economic growth through immigration, ensuring sufficient housing supply, and addressing labour market needs. The housing crisis, much like immigration policy, requires an acknowledgement of both short-term constraints and long-term goals for a sustainable and inclusive Canada.
The PBO’s report underscores the complexities involved, highlighting that immigration policy alone cannot resolve the housing crisis. A combination of increased construction efforts and a balanced population growth will be essential to achieving lasting solutions.
Canada’s decision to scale back immigration targets has added a new layer to the housing debate. While the move may ease demand, it falls short of addressing the structural challenges at the heart of the housing crisis. Bridging the gap will require bold policy decisions and significant investments in housing and infrastructure.
FAQ: Housing Gaps and Immigration Restrictions in Canada
Why has Canada reduced its immigration targets?
Canada has reduced immigration targets to address the housing crisis by slowing population growth, which drives housing demand. The revised plan lowers permanent resident admissions from 485,000 in 2024 to 365,000 by 2027. This aims to ease pressure on housing availability and affordability. However, critics argue that curbing immigration may harm the labour market, particularly in construction, a sector heavily dependent on immigrant workers to build the necessary housing.
How will reduced immigration targets impact the housing crisis?
Reduced immigration targets are projected to narrow the housing gap by 534,000 units by 2030, according to the Parliamentary Budget Officer (PBO). The federal government estimates an even larger reduction of 670,000 units by 2027. However, both projections assume significant decreases in population growth, including the departure of non-permanent residents, which some experts view as overly optimistic given uncertainties in their behavior.
What is the housing gap in Canada, and what are the solutions?
Canada faces a housing gap of 1.2 million units by 2030, requiring 2.3 million new homes to achieve balance. Current housing starts, at 224,000 units in 2023, fall far short of the 390,000 annual target. Achieving these goals demands addressing barriers such as skilled labour shortages and underinvestment in construction. Policymakers must align immigration, labour, and housing strategies to foster both economic growth and housing affordability.
Does immigration cause Canada’s housing crisis?
Immigration is not the root cause of Canada’s housing crisis, but rapid population growth due to immigration has intensified demand. Years of underinvestment in construction, rising costs, and labour shortages are the primary contributors. Immigration Minister Marc Miller emphasized that immigrants are essential to Canada’s economy and society and should not be blamed for the housing shortfall. A balanced approach is needed to address both housing supply and population growth.
What are the trade-offs of reducing immigration to address housing?
While reduced immigration may alleviate housing demand, it risks worsening labour shortages, especially in construction and essential services. Non-permanent residents, such as international students and temporary workers, play vital roles in Canada’s economy. Critics worry that strict immigration policies could deter global talent and harm sectors reliant on newcomers. Balancing housing supply with robust immigration policies is essential to meet Canada’s economic and social goals.
