Surging Population Growth in Canada: What Are the Impacts?

In 2023, Canada's population reached 40.5 million, having grown by over 1.2 million people. This is an astounding figure, particularly given the rebound of 825,000 in 2022 after the COVID-19 recession. It is also the largest increase in any 12-month period since the country's creation in 1867.

According to a report from National Bank Financial Inc., Canada's population growth in 2023 was 3.2%, five times higher than the OECD average. What's more, all ten provinces grew at least twice as fast as the OECD, ranging from 1.3% in Newfoundland to 4.3% in Alberta.

According to Statistics Canada, international migration accounted for 98% of Canada's growth in 2022/2023. The reasons can be attributed to the Canadian government’s effort to address labor shortages in crucial sectors of the economy.

India contributed the largest number of new permanent residents to Canada, resulting in an increase in their population from 32,828 individuals in 2013 to 118,095 people in 2022. This group represented over a quarter of all new immigrants.

Last November, IRCC(Immigration, Refugees and Citizenship Canada) released details on the Government of Canada's Immigration Levels Plan for 2024-2026. The plan aims to admit 485,000 new immigrants in 2024, followed by an annual increase to 500,000 in both 2025 and 2026.

Economy: The government's decision to increase population through immigration is a strategic approach aimed at addressing the labor shortage and promoting economic growth. By welcoming immigrants, the government hopes to increase the pool of available workers, leading to the expansion of the economy.

Housing demand: Due to rapid and sustained population growth, Canada is facing a medium to long-term housing supply shortage. CMHC(Canada Mortgage and Housing Corporation) stated that Canada needs about 3.5 million additional housing units by 2030 to restore affordability. As CMHC CEO Remy Bowers mentioned, one of the critical ways to solve the problem is to increase the construction of purpose-built rental properties dramatically.

Rental market: Increased population leads to greater demand for rental properties, potentially leading to lower vacancy rates and higher rental prices, particularly in cities with limited rental inventory.