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But new immigrants could keep the runaway property market soaring, which the central bank warned was spurred by a “sudden influx of investors”.
The government of Prime Minister Justin Trudo is expected to achieve its goal of 401000 new permanent residents this year and is preparing to target 411000 new immigrants next year, a government source said.
Successive Canadian governments have relied on immigration to drive economic growth amid declining fertility, which hit an all-time low last year. Attracting immigrants has become even more important as the epidemic has triggered the early retirement of older Canadians. In addition, Canada’s goal is high-quality immigrants, who can often bring money and income to buy ideal housing.
Sean Fraser, the new immigration minister, told Reuters:
Canada needs immigrants to create jobs and boost our economic recovery. Not only is one in three Canadian companies founded by immigrants, but new immigrants are also helping Canada solve its labor shortage.
The surge in house prices is mainly due to low interest rates and supply shortages, although immigration was another factor before the epidemic. Now, as the border opens again, more new immigrants will come to Canada.
The surge in house prices has fuelled inflation, reaching an 18-year high. Economists say the government’s plan to ease housing costs will take time to implement, and some measures may further strengthen demand.
“this is a difficult problem.” Stephen Brown, a senior Canadian economist at Capital Economics, said of the impact of immigration on housing costs.
At the same time, Brown said that Canada’s ongoing construction and the demand for labor prove that we need more immigrants.
Canada has reached a tipping point where there would be no increase in the labour force without immigration.
Job openings in Canada have doubled this year, according to official figures. The Canadian Association of Manufacturers and exporters has asked the government to double its economic immigration target by 2030 because of a shortage of workers in the manufacturing sector.
Benchmark house prices have risen 77.2 per cent since Durudo took office in November 2015. His government plans to submit a housing plan to Parliament, including a C $4 billion (US $3.2 billion) fund for the largest cities to speed up the housing plan.
According to Statistics Canada, immigrants tend to buy houses in large urban centers, such as Greater Toronto and Vancouver, where house prices are now more than C $1.12 million.
Nationwide, the average price of a house is C $762500 (US $600299), according to real estate agents. According to Zillow, the average home price in the United States is $312728.
Although analysts polled by Reuters believe that Canadian house prices will slow in 2022, they will still rise by 5.0%, making it harder for people to afford.
The government fund aims to build 100000 new “middle-class” homes by 2024-25, and the money will be invested in cities that can speed up development.
A Canadian real estate agent said that before the outbreak, about 45000 new immigrants moved into Pierre each year, but stopped during the outbreak due to border closure.