Record population growth risks aggravating Canada's housing headaches, say economists
Canada’s record population growth in the third quarter brings its housing crisis into the spotlight once again, with economists urging governments to boost spending to accommodate all the new arrivals.
The country added 430,635 people from July to October, Statistics Canada said on Dec. 19, with the 1.1 per cent boost to the population being the highest quarterly growth rate since the second quarter of 1957. Overall, more than one million people were added during the first nine months of 2023, which is higher than any other full-year period since 1867.
“The population numbers once again reinforce the need to boost the housing supply and bolster infrastructure spending,” Desjardins economist Marc Desormeaux said in a Dec. 19 note.
He added that until Canada improves its “long-run underperformance on productivity,” the country is “at risk of further declines in gross domestic product per capita (and our standard of living).”
Canada depends on immigrants to boost its economy and to replace its aging population. But the country is now battling inflation and a housing crisis, so economists and think tanks have urged the federal government to provide more clarity on how it plans to accommodate hundreds of thousands more newcomers.
Bank of Canada deputy governor Toni Gravelle highlighted the issue in a speech on Dec. 7, when he said the recent increase in immigration is adding pressure to Canada’s existing housing supply crisis, though he said it did not have a significant impact on inflation overall.
The federal government has made several initiatives to increase housing supply in recent months; however, BMO Capital Markets senior economist Robert Kavcic believes it will be difficult to match the quick rise in population.
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