Trudeau’s Immigration Cut Will Narrow Housing Gap, Watchdog Says

Prime Minister Justin Trudeau’s plan to restrict inflows of newcomers will narrow the country’s gap between housing supply and demand, according to a budget watchdog.

Author of the article:

Bloomberg News

Randy Thanthong-Knight

Published Nov 15, 2024  •  2 minute read

A condo building under construction in Calgary, Alberta, Canada, on Wednesday, May 15, 2024. Rising housing costs have driven tens of thousands of Canadians to Alberta in search of cheaper real estate. While the influx has bolstered parts of the economy, it has crowded schools and driven up costs for residents. Photo by Todd Korol /Bloomberg

(Bloomberg) — Prime Minister Justin Trudeau’s plan to restrict inflows of newcomers will narrow the country’s gap between housing supply and demand, according to a budget watchdog.

If Trudeau is successful in curbing immigration over the next three years, that would reduce the housing gap in 2030 by 534,000 units, or 45%, said the Office of the Parliamentary Budget Officer, which provides independent analysis to help lawmakers scrutinize the government’s activities.

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While the slowing population growth may help reduce the severity of shortages, Canada’s housing supply would still fall short of demand by 658,000 units in 2030, according to the office’s report published Friday. It highlights the ongoing challenge of under-construction in a country that’s home to some of the world’s hottest real estate markets.

Canada would require a total of 2.3 million housing completions by the end of this decade to close the housing gap, the watchdog estimates. That translates into 390,000 total units completed annually, on average, over the next five years. Last year, housing starts dipped to about 224,000 units.

Trudeau’s government last month reduced its annual permanent-resident target by more than 20% and said it wants to halt population growth by shrinking the number of temporary residents — such as international students and foreign workers — through an exodus of more than a million people.

The office, however, noted there’s “significant risk” to the projection in the government’s plan, particularly the estimated outflows. “The plan assumes that 2.8 million temporary residents will leave the country over the next three years,” equivalent to 93% of the group’s current population.

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Immigration Minister Marc Miller said earlier this week that the government is focused on making sure “the people that don’t want to leave after due process actually do leave.” Miller cited record increases in the number of migrants removed from Canada this year as evidence that “enforcement is happening.” 

The government has set a goal to more than double the pace of construction to add 3.9 million homes by 2031 as it tries to calm housing angst and reverse waning popularity. But pro-immigrant groups have warned that the migration curb could lead to shortages of skilled labor in sectors including construction.

—With assistance from Thomas Seal.

(Updates with more details from the report; adds context and comments.)

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