The latest projections from Statistics Canada show that Canada’s population is poised to grow much faster over the next two decades than the federal agency forecast just three years ago, suggesting any downturn in the country’s housing market is likely to be short-lived.
Indeed, the revised Statscan figures released last week underscore the need for policy makers to clear the way for more housing and infrastructure projects now to accommodate a fast-growing national population that is projected to increase by around 10 million people by 2043.
Statscan normally updates its population projections every five years. But the agency undertook a “necessary” revision of its 2019 projections this year “to reflect recent developments in Canadian demographics,” including the pandemic and Ottawa’s move to increase immigration targets. While the longer-term impact of the pandemic on population growth is expected to be “rather imperceptible,” the opposite is true for the higher immigration levels.
In February, Prime Minister Justin Trudeau’s government announced plans to increase immigration levels “to help the Canadian economy recover and to fuel post-pandemic growth,” following a sharp drop in the number of newcomers arriving in Canada in 2020. Immigration rebounded in 2021, with a record 405,332 new permanent residents arriving here. And Canada is set to welcome about 432,000 new permanent residents this year, 447,000 in 2023 and 451,000 in 2024.
National Bank of Canada economists Matthieu Arseneau and Alexandra Ducharme noted that Canada’s population will increase by one million more people by 2032 than Statscan previously projected. Almost all of that extra growth will occur among those aged between 25 and 54 years old – an age cohort that is “crucial to the resilience of consumption and real estate.”
Canada’s next wave of immigration set to add more fuel to overheated housing market
Royal Bank of Canada economists Robert Hogue and Carrie Freestone came to a similar conclusion even before the release of Statscan’s updated population projections. In a mid-August report, they projected that Canada will count 730,000 more households by 2024 than it had in 2021, as the country welcomes more than 1.3 million new immigrants.
“This surge, combined with shrinking household sizes, will strengthen demand for housing (whether owned or rented) and act as a powerful counter to sliding sales and prices – eventually putting a floor under the correction,” they wrote.
The updated Statscan projections highlight the urgency for policy makers to plan for what is expected to be the highest population growth among the Group of Seven countries over the next two decades and beyond. Based on the federal agency’s medium-growth scenario, Canada’s population is projected to grow to 47.8 million in 2043 from 38.2 million in 2021.
Ontario is expected to add more than four million new residents over the next 20 years, with its population rising to 19 million from 14.8 million. Canada’s most populous province will see its share of the national population increase to 39.8 per cent from 38.8 per cent.
Even so, Ontario’s 28-per-cent population growth over the next two decades is expected to pale compared with a 46-per-cent surge in Alberta, which will see its population grow to 6.5 million by 2043 from 4.4 million. Albertans will account for about 13.5 per cent of Canada’s population in 2043, up from 11.6 per cent in 2021.
However, Quebec’s share of the Canada’s population is set to fall below 20 per cent for the first time, as the province (which chooses its own economic immigrants) accepts proportionally fewer newcomers than the rest of the country. From 22.5 per cent of Canada’s population in 2021, Quebec will see its share decline to 19.8 per cent by 2043. Quebec’s overall population will grow by less than 10 per cent over the same period, to 9.4 million.
The Atlantic provinces will benefit from interprovincial migration levels that will be higher than those forecast before the pandemic, but not enough to reverse a decline in the region’s share of the national population. Newfoundland and Labrador’s population will shrink outright.
Ottawa’s higher immigration targets will on their own not be enough to ease the country’s labor shortage, as more and more Canadians retire in coming years. Even more aggressive immigration levels would be needed to reverse the aging trend that will see the share of the population over 65 increase steadily over the next two decades to 23.1 per cent in 2043 from 18.5 per cent in 2021.
The average age of Canadians, which increased from 27.3 years in 1921 to 41.7 years in 2021, will rise further to 44.1 years by 2043. And while about 871,000 were over 85 in 2021, their ranks will swell to more than 2.2 million by 2043.
Still, Canada’s population projections tell a rather enviable story compared with many European countries, where population aging is occurring at a much faster rate amid lower immigration levels. The question is whether policy makers here can move fast enough to prepare the country for its coming population boom.
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