The country’s population saw an average annual growth of 553,568 between 2018 and 2022. In contrast, only an average of 205,762 new homes were constructed each of those years. This has created a 50-year high gap between the two figures, as per the Fraser Institute’s research. Ontario and British Columbia are especially feeling the resulting strain.
On top of this, earlier this month, the federal government announced plans to level out the number of new permanent residents in Canada from 2026 onwards, while still increasing targets as planned for 2024 and 2025.
When REM asked Andrew Carros of Engel & Völkers Vancouver for his thoughts on the issue, here’s what he had to say.
Q: What do you see as the main challenges for newcomers, as housing inventory is low?
A: Rental unit scarcity is a major challenge in the market, especially in metropolitan areas where rental rates are disproportionately high, affecting home renters significantly. There’s a shortage of available rental properties, underscoring the need for focused solutions to address this pressing concern.
Over the past four years, both Ontario and British Columbia have experienced remarkable population growth. In Ontario, the annual increase amounted to approximately 240,000 individuals from 2018 to 2022, as per research by the Fraser Institute released in October this year. Yet, Ontario housing completions averaged only 70,828 per year during this period, highlighting a considerable disparity between population growth and housing development.
A comparable scenario is unfolding in B.C, where the population is growing, yet housing completion lags.
“Effective government intervention is necessary”
Despite having ample space and land, the absence of sufficient housing hampers the ability of Canada to accommodate our growing population. There is a palpable lack of motivation to develop rental properties. To solve the problem, the government must introduce incentives.
A noteworthy aspect is the recent tax break for developers aimed at incentivizing rental tower construction. However, a limited number of development groups are engaging in these projects due to high land and construction costs, compounded by market affordability challenges. To overcome this, effective government intervention is necessary. Providing affordable land for development and exploring direct land purchase options can encourage more developers to enter the market.
Additionally, many developers are foreign entities and are currently unable to purchase due to the foreign buyer ban. Allowing them back into the market and incentivizing them to build rentals would further stimulate growth in the rental property market. While tax breaks are positive, a collaborative and comprehensive approach is crucial for sustained real estate development.
Q: Which markets are most impacted and what are some short or long-term solutions?
A: When immigrating, community ties play a pivotal role in shaping residential decisions. Beyond market trends, residents are drawn to areas with shared histories, cultural bonds and communal connections. The robust connections established in these regions directly contribute to an increased demand for rentals, particularly noticeable in cities such as Richmond and Surrey in B.C., and Brampton and Mississauga in Ontario.
Canadian housing markets continue to transform, with immigration playing a significant role. From a solutions perspective, a strategic focus on building up small towns, coupled with government incentives and a shift in developer priorities, could be the key to addressing the challenges and ensuring a balanced and sustainable housing ecosystem, especially for newcomers.