The law of supply and demand seems to escape the notice of the federal government.
You hear a lot about Canada’s rapidly increasing immigration levels.
The Liberal government has raised immigration to over 460,000 this year, and expect to reach 500,000 per year by 2025.
However, even that understates the true increase.
According to an analysis by CIBC, Canada’s true number of new arrivals this year will be closer to 1 million.
And – in keeping with the law of supply and demand – this massive increase in population is leading to surging rent prices.
As reported by BNN Bloomberg, vacancies are dwindling, while rent inflation is surging:
“The country actually had close to 1 million international arrivals last year, according to an analysis by Canadian Imperial Bank of Commerce that’s based on other data, including visas. It will probably accept a similar number this year, said Benjamin Tal, the bank’s deputy chief economist.
As a result, Canada is experiencing its fastest population growth since the 1970s, and apartments have become extremely hard to find. The vacancy rate on rental buildings is below 2 per cent, the lowest since 2001. In Vancouver, it’s less than 1 per cent. The situation is made worse by rising interest rates that have made buying a home unaffordable for many people, pushing them into the market for rental properties.
“We’re underestimating how many people are here and how many people are requiring real estate,” Tal said in an interview. “If you don’t have official numbers showing the demand accurately, municipalities making allocation for housing based on those are missing the magnitude of the need.”
The consequences of that undercounting can already be seen, Tal said. Rent inflation was nearly 6 per cent in the last two months of 2022, accelerating from 3.1 per cent early last year.”
And with the Liberals pushing ahead with large population increases, and many cities embracing an ‘anti-development’ mindset, Canadian consumers are being hit hard:
“It’s dire from a consumer point of view,” said Mark Kenney, chief executive officer of Canadian Apartment Properties Real Estate Investment Trust, Canada’s largest publicly traded apartment company.
Local government red tape is one reason more apartments aren’t being built, Kenney said, which means housing policy is out of alignment with Trudeau’s approach to immigration.
“Canada was at a point for many, many years where we had housing affordability and you could have open immigration policy. There were ample homes for all,” Kenney said. “The combination of turning up the volume on the immigration front, and turning down the volume on development, has put us in really bad shape.”
It really can’t be stated enough how absurd it is that we are in this situation.
The law of supply and demand is so intuitive, and so simple that we shouldn’t even need to talk about it.
The Liberal government knows that a massive population surge will make all kinds of housing less affordable, unless the government is also incentivizing a significant increase in the housing supply – which they are not.
So, they can talk all they want about ‘addressing affordability’ and ‘helping Canadians,’ but all those words are nothing but gaslighting.
The actions of the government are what matters, and their actions show they are just fine pushing up the price of housing and rent to even more unattainable levels.