Canada's Population Surge and What It Does to Housing

As of May 2024, Canada was adding people faster than at any point in the previous decade, and the arithmetic was simple: 411,000 people aged 15 and over arrived in the first four months of 2024, 50% more than a year earlier, and that demand lands on a housing market that cannot build fast enough.

I am Moe Asgarian, a Broker in Toronto with RE/MAX, ranked #47 in the company worldwide. Population growth is not a side topic in my work, because it arrives as competition for the same houses and the same rentals. Statistics Canada and the Bank of Canada both publish on it, so here is what the numbers said as of May 2024 and what they meant for housing.

How Canada got here: the pandemic, printed money and inflation

Start with the pandemic. Economies everywhere went through something unusual and Canada was not exempt. The government decided to print money to hold up the economy and businesses, and that fed straight into inflation.

Higher inflation pushed interest rates up, and higher rates pushed mortgage payments up with them. As of May 2024, on average, Canadians were paying about 40% more on their mortgage than before. The cost of living rose at the same time, from restaurants to groceries, so households postponed the car purchase and skipped anything that was not necessary. Add that up and you get less business activity and slower economic growth, which is the position Canada was in by May 2024.

Why the labour market decides the next rate move

As of May 2024, everyone was waiting for the same thing: lower interest rates, and some factor that could pull the economy out of its slow patch. The one that matters most is the job market, meaning how many people go to work each month and what quality that work is. The Bank of Canada leans heavily on that when it decides whether to cut or hold.

The most recent official federal figures as of May 2024 showed a large number of new jobs created in the month. Two caveats came with them. The unemployment rate stayed flat despite all that hiring, and roughly half of the new jobs were part time, which pay less than full-time work and do less for the Canadian economy. That is a weaker report than the headline looked.

The population numbers as of May 2024

According to the official figures, 411,000 people aged 15 and over came to Canada in the first four months of 2024, which was 50% more than the same period a year earlier. As of May 2024, Canada was experiencing its highest population growth of the previous 10 years, and the share of population added was unprecedented going back to the 1950s.

Much of that growth was in temporary workers and students, which is the part the media and the official institutions were writing about as of May 2024. It is also why the federal government had begun looking at ways to slow this immigration down.

What it means for home prices

A senior economist at the Bank of Canada argued in this period that even with the government trying to reduce the number of newcomers, the situation would still have a large effect on home prices in Canada. With that many new arrivals there is simply more demand for housing, and more demand pushes prices up. There is no clever way around that arithmetic.

This is where the two halves of the story meet. As of May 2024 rates were high and the economy was slow, which held buyers back, while population growth kept adding households that need somewhere to live. One of those forces is temporary and driven by policy. The other takes years to work through.

What this meant for buyers and renters in Toronto

In practical terms, as of May 2024 a buyer in Toronto was competing against a smaller pool of other buyers, because high rates had pushed many of them to the sidelines, but against a growing pool of future buyers and renters. That is why I told clients that a soft month was not the same thing as a soft market.

For renters the pressure was more direct, because new arrivals go into rental housing first. If you were deciding between renting another year and buying, the population side of the ledger belonged in that decision alongside the rate forecast. Judge it by the trend over years, not by the last set of monthly figures.

If you want to work out what these forces mean for your own purchase, sale or rental in Toronto, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.