Canada's New Immigration Targets Expected to Have a Major Impact on the Economy and Housing Market
Immigration Minister Sean Fraser has unveiled plans for Canada to welcome 1.3 million newcomers over three years.
The strategy, announced Monday, would see Canada land a record-breaking 431,645 new permanent residents in 2022, another 447,055 in 2023 and then 451,000 in 2024. It's expected to have a major impact on the economy and housing for years to come.
“We are focused on economic recovery, and immigration is the key to getting there," said Fraser after the plan was tabled in Parliament.
Bold new immigration targets
The September 2021 federal election pushed the announcement back to February from November.
These are now the official targets the Trudeau government has set for the number of economic immigrants, family members and refugees under various programs to be admitted.
This plan increases Francophone immigration outside of Quebec, and expand immigration to benefit smaller, more rural communities.— Sean Fraser (@SeanFraserMP) February 15, 2022
It also recognizes the importance of family reunification, and helping the world's most vulnerable populations through refugee resettlement.
"Setting bold new immigration targets … will further help bring the immeasurable contribution of immigrants to our communities and across all sectors of the economy," said Fraser.
Critics worry about the existing massive backlog
Critics, such as Canadian Immigration Lawyers Association (CILA), have publicly called on the minister to address the massive 1.8 million applications that are currently stuck in a system backlog caused, in part, by the COVID-19 pandemic. Experts predict the backlog could take up to three years to clear.
Over the next five years, $827.3 million has been targeted by the federal government to the immigration department to enable it to produce a new digital platform. Another $85 million has been earmarked for hiring more staff to reduce the backlog.
In a statement following Fraser's announcement, CILA said that it is "pleased with the modest newcomer increase announced today under the new Immigration Levels Plan 2022-2024."
New ambitious targets may be ill-timed
However, in a story written last week, CILA advised Fraser that "Canada needs to continue to welcome more immigrants but announcing more ambitious targets under the 2022-2024 levels plan may be ill-timed.
"CILA believes it would be in the immigration system’s medium- and longer-term interests for IRCC to use this year as an opportunity to reduce its backlogs and to continue to make the necessary technological investments and changes that will improve processing times and client experience moving forward."
Correction - Overall Planned Permanent Resident Admissions - for 2022 - includes 55,900 Federal High Skilled (Express Entry - FSW, CEC, FSTP), 40,000 Federal Economic Public Policies (inc leftover TR to PR), and 83,500 PNP (inc. paper & EE) https://t.co/dMOFwT53Kx— Tamara M-K (@TTRRMK) February 14, 2022
In order to achieve its announced goal of admitting 405,000 newcomers in 2021 (which was a record), Ottawa gave permanent residence to migrants such as international students and foreign workers who were already living in Canada.
The Afghan refugee crisis also brought thousands of refugees to Canada but contributed to the growing backlog of applications.
Immigration drives the economy and housing
As of December, reports The Toronto Star's Nicholas Keung, 548,195 permanent residence applications; 775,741 temporary residence applications, including study and work permits; and 468,000 citizenship applications were awaiting processing.
The announcement by Fraser reinforces Prime Minister Justin Trudeau’s desire to increase immigration numbers in order to speed the recovery of the economy and to address severe job shortages in several sectors of the economy.
In a statement to https://t.co/eIiFgJbGV7, Minister @SeanFraserMP explains the rationale for the new levels plan: "This levels plan is a balance of needs for our country and our international obligations."@canadavisa_com #cdnimm #cdnpoli #immigration https://t.co/reEiiekl7G https://t.co/I55rQEtFet— Kareem El-Assal (@kareemelassal) February 15, 2022
As reported by Kareem El-Assal in CIC News, Canada targets high levels of newcomers to support its economy and fiscal standing. Due to its aging population and low birth rate, Canada needs higher levels of immigration to support its population, labour force, and economic growth, as well as to have enough workers to pay the taxes necessary to support important social services such as health care and education. Canada also pursues social immigration objectives including reuniting families, providing humanitarian assistance, and strengthening its Francophone heritage.
The Provincial Nominee Program (PNP, writes El-Assal, will be the main admissions program for economic class immigrants with Immigration, Refugees and Citizenship Canada (IRCC) looking to land 83,500 newcomers via the PNP in 2022. IRCC has cut Express Entry admissions in half for this year but aims to return to normal Express Entry admissions levels by 2024 when it targets the arrival of 111,5000 Express Entry immigrants then.
Newcomers to Canada buying homes quicker than ever
The new target will certainly have an impact on Canada's housing market. A recent Ipsos Public Affairs survey showed that newcomers to Canada are looking to buy their first new home faster than ever.
Conducted for the Toronto Regional Real Estate Board (TRREB), the research firm studied the route immigrants take to homeownership. A key insight showed that a large percentage of newcomers to Canada are homebuyers within their first five years of arriving.
Another important piece of Ipsos data showed that immigrants to Canada are overall more focused on owning a home than non-newcomers.
“We have this mythology of the poor immigrant coming in and they are going to be renting undesirable apartments for years and struggle to get jobs and education,” said Sean Simpson, vice-president, Canada, Ipsos Public Affairs. “Certainly that’s the experience for some groups. What this data is showing us is, after a couple of years, many of them are doing what the rest of us are able to do – and that’s buy a home.”
In the Canada InfoNet pre-arrival program we advise immigrating professionals to consider the full picture before choosing where to settle in Canada,
And while newcomers in the past have tended to settle in the three main gateway cities (Toronto, Vancouver and Montreal), secondary cities, with cheaper housing prices, are vying aggressively to settle new immigrants.
“In the Canada InfoNet pre-arrival program we advise immigrating professionals to consider the full picture before choosing where to settle in Canada," said Jois. "They should factor in employment outlook, cost of living, lifestyle and also importantly housing affordability as part of their plan for Canada. Most people only know of and consider the bigger cities but once they weigh in all aspects, moving to a community where home buying is more affordable becomes a logical choice for many.”
Governments need to focus on affordable housing
David Frattini, Managing Partner Destination Canada Information Inc. (Prepare for Canada and Rentals for Newcomers), welcomed the announcement but also stressed the need for an intensified focus on affordable housing issues.
“The ambitious plan the government has laid out reflects a balance between Canada’s economic needs and its international and humanitarian obligations and that is wonderful to see," said Frattini. "At the same time, the government needs to address the issue of affordable housing that is of importance to all Canadians but is especially acute for these newcomers whom we are encouraging to choose Canada as their destination of choice.”
As the spring market approaches, the number of listings on the market remains at an all-time low. The national number of months of inventory remains stuck at just 1.6. Learn more 👉 https://t.co/ABP2i2Kfbk #CREAStats pic.twitter.com/WPa1849RrD— CREA | ACI (@CREA_ACI) February 15, 2022
Fraser's announcement may also spur homebuying activity by investors.
As Scotiabank Housing Economist Farah Omran pointed out in her January report, investor demand for housing is strong, and "at least partly driven by strong immigration, which is a prime source of rental demand."
Investors play a key role in rental supply
Investors, said Omran, are keen to rent to newcomers and the increase in their activity in the housing market impacts both the owned and rented market segments in Canada.
"Investors play a critical role, providing essential rental supply. The share of investors reported by the Bank of Canada captures units that are bought and flipped for a profit—however, the Bank reports that in recent years, homes bought and resold within six months have accounted for only one percent of transactions, while those flipped within 12 months have accounted for two percent."