At the rate the Canadian government is going, the surge in population is starting to look less like a carefully devised plan to bolster the labor market and more like a recipe for inflating home prices.
Canada is seeing a staggering surge in population growth, with the latest quarter exploding by a net total of over 430,600, marking the third-largest quarterly increase on record. The annual growth rate reached 3.2%, totaling 1.25 million in the past year — the highest for any 12-month period. This growth, primarily fueled by immigration, hasn’t been seen since 1958, despite the considerably smaller population at that time.
BMO Capital Markets recently weighed in and estimated that at this rate, Canada needs 170,000 new houses every three months to accommodate households with 2.5 people — “even before accounting for domestic household formation.”
The real estate industry is already strained trying to build 220,000 homes every year, or just a fourth of the BMO estimate, plus the escalating demand for materials, coupled with global competition, is inflating costs, making the ambitious building targets even more challenging.
Related: Canada’s Labour Market Remained Unchanged in July as Population Levels Increase
“Despite many commendable efforts, in no version of reality can housing supply respond to an almost overnight tripling in the run-rate of new bodies. This is (still) the case of a demand curve running loose,” said BMO economist Robert Kavcic.
Information for this story was found via Paul Vieira/WSJ Wires, Better Dwelling, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
