Population growth is the housing issue politicians can’t keep ducking – The Globe and Mail

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If there’s a hot political debate over why Canada has a housing crisis, it is important to talk about the proximate cause.

It’s population growth. And the temporary resident boom.

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Canadian politicians have spent a lot of time dodging and ignoring this unavoidable fact.

Rapid population growth, driven primarily by an unprecedented boom in temporary residents – mostly temporary workers and foreign students – has turbocharged demand for Canada’s slow-growing stock of apartments and houses.

That’s not the fault of those foreign workers and students. It’s the fault of governments whose planning and policies have failed miserably.

Those are the failures of Ontario Premier Doug Ford’s government, which has allowed a foreign student boom to grow, without adequate plans for housing. And Prime Minister Justin Trudeau, whose government didn’t monitor or limit that, and also expanded temporary-worker programs, all without adequate plans for housing.

And still politicians say little about it.

When Conservative Leader Pierre Poilievre puts out a 15-minute video called Housing Hell which purports to explain the causes of Canada’s housing crises, we should expect that it won’t avoid a key factor. But it did.

That’s why the measures that Immigration Minister Marc Miller announced last Thursday are noteworthy. In a bid to slow the boom in foreign students, he doubled the amount of money they must bring and threatened to cap numbers if provinces don’t curb abuses. That is a step, at least, after a long failure to act.

One reason federal politicians have been reluctant to talk about population growth is that they do not want to appear to be anti-immigrant. That’s a good reflex, even if it is partly political calculation.

Immigrants are not the problem – governments are. They failed to plan. It is not really higher targets for permanent immigrants that are driving the growth, either, but an essentially unplanned expansion of temporary residents, who now number 2.2 million. Blame governments.

So it’s distressing to see an opposition politician pledging to fix the problem – Mr. Poilievre – miss this key point.

The Conservative Leader’s video included valid points about the slow growth of Canada’s housing stock. Accelerating building is the real medium- and long-term solution. However, that process will take years.

But Mr. Poilievre’s claim that houses are a lot more expensive in Canada than in the U.S. because of Ottawa’s inflationary deficits doesn’t really add up: The U.S. has run far higher deficits, noted economist Mike Moffatt, a Western University professor and senior director of policy at the Smart Prosperity Institute

Mr. Poilievre makes an argument for why deficits and monetary policy caused inflation but that is largely part of another debate. Canada’s housing-price spike isn’t just general inflation.

Inflation lifted prices about 29 per cent of the last 10 years, according to Statistics Canada, but Prof. Moffatt noted that in Ontario, home prices went up by 120 per cent – in Tillsonburg, 228 per cent. That’s not ordinary inflation. Something else is happening with supply and demand.

Mr. Poilievre’s video offered a bizarre version of housing supply and demand, arguing Canada has lots of land (so lots of supply) and a small population (so not much demand.) But people live in homes, with walls, and connected to infrastructure. And it is growth in population that drives demand: If Canada had a population of 100 million that shrank by five million in a year, home prices would plummet.

Instead, Canada’s population grew by 2.9 per cent from July 1, 2022, to July 1, 2023 – almost 1.2 million people. The majority were new temporary residents.

In Ontario, population growth from about 2015 increased home prices in the Greater Toronto Area and then across southwest Ontario, Prof. Moffatt said. There is inter-connection, too, and New Brunswick saw Ontarians move in looking for less expensive housing, particularly with the work-from-home revolution. Rents and home prices took off where planning didn’t keep up with growth.

All of that is not a reason for Canada to turn its back on immigration, and its many benefits. The problem was an abject failure to plan.

But it does mean that in the short term, there is a policy lever governments can pull now to cool the housing market. That is temporarily slowing the growth of temporary residents – capping the number of new students and new temporary workers. That could prevent another year of high rent increases on new leases.

Avoiding the issue – avoiding an unavoidable fact about the housing crisis – will only pile misery onto past failures.

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