New immigration plan needs changes to avoid more strain on housing supply

Construction crew works on new homes under construction, on the day Bank of Canada increased its policy rate a full percentage point in Brampton, Ontario, Canada July 13, 2022. REUTERS/Carlos Osorio
Canada's immigration minister has said immigration could help fill the roughly one million job vacancies across the country, including in the residential construction sector. REUTERS/Carlos Osorio (Carlos Osorio / reuters)

As Canada readies for an even bigger influx of newcomers in the coming years, experts say if the federal government targets the right kind of skilled workers, it could help ease the country's labour shortage, including in the housing sector.

"Housing is a big challenge. We're looking to build more housing, but we don't have the construction workers to do it," said Pedro Antunes, chief economist at the Conference Board of Canada, in a phone interview with Yahoo Finance Canada.

"So we're stuck in this problem situation where, you know, perhaps immigration can help fill some of that void, but it takes time to build homes and in the interim, we do need to ensure people have places to live – Canadians, new immigrants and non-permanent residents."

The feds announced an increase to its immigration targets earlier this month in part to address the country's labour shortage. Canada now aims to welcome 500,000 new permanent residents in 2025. Targets for 2023 and 2024 were also increased to 465,000 and 485,000, respectively.

It's an ambitious plan. Canada would welcome four times more permanent residents annually, as a portion of population, compared to the United States.

Immigration Minister Sean Fraser has said higher immigration would help fill the roughly one million job vacancies in Canada's economy and even facilitate the construction of more homes by filling construction-related jobs.

However, a recent poll by Leger and the Association of Canadian Studies found 75 per cent of respondents had some level of concern over how an influx in population could put additional strain on the housing market and social services.

"Clearly, we do have a dire need for workers in a range of industries. And I think what I want to stress here is that we have job vacancies and labour shortages throughout the labour market at different levels of skill in different sectors," said Dr. Rupa Banerjee, a Toronto Metropolitan University assistant professor and Canada Research Chair of Economic Inclusion, Employment and Entrepreneurship of Canada's Immigrants, via phone.

But the current immigration system tends to favour those with high-tech skills and individuals who are already studying or working in Canada. This type of system doesn't lend itself to addressing the need for workers in sectors such as healthcare or skilled trades, she adds.

A recent Canada Mortgage and Housing Corporation report says Canada doesn't have the labour capacity to build the 3.5 million homes that it estimated the country needs to reach housing affordability targets by 2030.

"One of the issues that we have around building more houses is a lack of skilled tradespeople. So if we are better at selecting who Canadian newcomers are and get more electricians, plumbers, and roofers, immigration can actually be the solution to the housing crisis, and not necessarily a contributor to it," said Mike Moffatt, assistant professor at Ivey Business School, in a phone interview.

"I think we need to do a better job in this country of aligning our housing policies with any policy that affects population growth."

Banerjee also suggests closer collaboration between different levels of government would help in addressing each province's needs. As it stands, immigration is a federal mandate while labour and education come under provincial jurisdiction.

In addition to bringing in more skilled tradespeople, Moffatt says provinces can address the housing shortage with better zoning policies and working with industry to find innovative ways to improve efficiency in home construction.

"We build houses today, particularly single-detached homes today, pretty much the same way we did 60 years ago. But we don't do that with cars or anything else in our economy. So I think there's room for the federal government or the provinces to do pilot projects and work with industry to find some new production techniques," Moffatt said.

The provinces could also be better served by having significantly more lede time from the feds on its immigration plans to give them time to adjust their housing policies and staffing needs to accommodate a bigger population influx, he adds.

"It would just give them time to react. Right now, the federal government announces these things with almost no notice and it doesn't give the system time to adjust," he said.

Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.

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