Proponents say lower immigration will help ease Canada's housing supply crisis, while others see it as a driver of Toronto's condo woes
Immigration policy has come to the fore once more this week with Conservative leader Pierre Poilievre’s push for the government to eliminate the temporary foreign worker program.
The measure, Poilievre charged, means the Canadian government is “shutting our own youth out of jobs” and causing the exploitation of poorly paid temporary immigrants.
He said the government has already handed out 105,000 permits this year, despite pledging to issue just 82,000.
In the housing and mortgage markets, immigration has been a hot-button issue in recent years. As rents and home prices swelled, then-prime minister Justin Trudeau announced a ban on foreign non-resident homebuyers purchasing property in Canada amid charges that that buyer cohort was creating excessive competition and driving up prices in the market.
Last year, Trudeau’s government also modified its immigration targets for the years ahead, announcing plans to welcome a lower number of new Canadians to the country than first envisaged amid a housing supply shortage.
Stabilizing the housing market was a key aim of that policy change, then-immigration minister Marc Miller said. The government said lower immigration numbers would “reduce the housing supply gap by approximately 670,000 units.”
That revised plan saw the government pledge to admit 395,000 new permanent residents, down 21% from the original target of 500,000, with further reductions expected through 2027.
The policy also introduced limits on temporary residents, including international students and foreign workers, reducing this group by nearly 450,000 by 2025.
It’s unclear whether scrapping the temporary foreign worker program would have a significant impact on Canada’s housing market, although major banks have already highlighted the effect lower immigration targets have had on home sales and prices.
That's good news for first-time buyers in many markets, but not so positive for landlords and investors – many of whom relied on new entrants to rent out their properties.
In Toronto, lower immigration this year is viewed as a key reason for cooling rents and plunging condo demand in the city. New immigrants have been a key renter cohort in years gone by, helping stoke investor interest in purchasing a secondary unit in the city and renting it out.
But that market is now nosediving, with federal minister of housing and infrastructure Gregor Robertson warning that Toronto’s condominium market “is now in free fall.”
“There’s far too much condo product in both Toronto and Vancouver,” Robertson said in an interview with the Toronto Star. “That type of housing was overbuilt in recent years, and it’s not selling in today’s market.”
Joel Fox, co-founder and chief operating officer at real estate closing platform Ownright, told Canadian Mortgage Professional that the market didn’t appear to be turning a corner, either.
“The hot question on everyone’s mind right now is ‘Why aren’t these selling when the prices drops are happening?’ But the price drops aren’t enough.”
The average asking rent for residential properties across Canada dropped to $2,088 in February, representing a 4.8% annual decline, according to the latest National Rent Report from Rentals.ca and Urbanation.
The report noted that this marks the largest yearly decrease since April 2021 and the fifth consecutive month of year-over-year rent declines.
What are your thoughts on the proposal to eliminate the temporary foreign worker program? Share your insights in the comments below.
