The Trudeau government declared on March 21, 2024, that it would accept fewer temporary residents due to the difficulty of assimilating so many newcomers so quickly. However, population growth appears to be accelerating in 2024.
Statistics Canada’s Labour Force Survey, the population aged 15 and over increased by approximately 411,000 in the first four months of the year, representing a than 50% increase over the four-month growth in early 2023.
This new acceleration was the focus of a recent research paper by Stéfane Marion, chief economist at the National Bank of Canada. “The demographic shock is getting worse in Canada,” he told Canada’s Globe and Mail.
Canada is seeing its strongest population expansion in decades, thanks almost exclusively to foreign migration, which includes the entrance of temporary workers and students. The population increased by about 1.3 million last year, or 3.2%, the fastest rate since the late 1950s.
Every month, tens of thousands of households participate in Statistics Canada’s labour survey. While the government includes population data in its monthly jobs report, they are not official estimates. Statscan publishes a different population report on a quarterly basis; the next edition is due June 19.
Nonetheless, these data indicate that Canada’s economy has remained strong to begin the year, which could complicate the federal government’s efforts to limit migration.
For the first time, the Trudeau government will impose limits on temporary residents beginning this fall. The government aims to reduce this group to 5% of the total population during the next three years; at latest count, they accounted for 6.5%.
Given those plans, “it would seem that many people have decided to come to Canada earlier,” Mr. Marion said, stressing that housing affordability may worsen in the short term.
Several analysts have predicted that Canada’s population growth will eventually decrease to approximately 1% when these new laws take effect.
Housing Affordability in Canada
Meanwhile, Stéfane Marion fears that housing affordability difficulties will increase amid another surge in immigration numbers.
“Demographic shock is worsening in Canada. The working-age population (aged 15 and over) increased by more than 100,000 in April, bringing the total to more than 410,000 after four months in 2024.
According to today’s Hot Chart, this is a significant acceleration (+47%) above the 278,000 increase seen in the first four months of 2023. Greater Toronto, where population growth hit a record 107,000 at the start of the year, has accelerated by 66% compared to 2023.
Greater Montreal and Greater Vancouver have not lagged behind since the beginning of 2024, with growth more than doubling that recorded in 2023.
With Canada’s Minister of Immigration, Refugees, and Citizenship, Marc Miller, announcing plans to curb immigration in 2025, it appears that many people have decided to come to Canada sooner.
Housing affordability issues could increase in the coming quarters, as we approach another record year of population growth.
RBC indicates a loss of affordability in Canada
RBC’s aggregate affordability score for Canada increased by 2.8 percentage points to 62.5% as mortgage rates rose and property prices rose somewhat. (An increase in the measure indicates a loss of affordability.) This reversed a little improvement in the second quarter.
The issue is particularly acute in Vancouver, Victoria, and Toronto, where property ownership is extremely expensive. Ottawa, Montreal, and Halifax also confront difficult affordability issues.
Last quarter, purchasers’ already bad situation deteriorated even further. A typical household required to set aside an additional 4.4 percentage points of its income to afford the costs of owning an average home at current prices and interest rates.
In fact, the entire income of that (median) household was insufficient, with RBC’s aggregate affordability metric coming in at an amazing 102.6%. The only practical choice for most ordinary consumers remains a less expensive condo apartment, which is still out of reach for many.
Home purchase activity has cooled again after unexpectedly rebounding last spring. Furthermore, prices are beginning to fall from their summer highs. In the face of significant affordability pressures, we believe the downward trend may accelerate in the near term.
Keywords: Canada News, Canada Population
