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Canada has seen rapid immigration-fueled population growth in recent years. That’s boosted its economy, but housing production hasn’t kept up. The limited supply and growing demand has exacerbated an existing affordable housing crisis and inspired calls not only to build more, but to impose stricter limits on immigration. A similar dynamic is playing out across advanced economies like Australia and the UK.

On today’s Big Take podcast, host Sarah Holder speaks with Bloomberg’s Randy Thanthong-Knight about the relationship between housing and immigration — and how governments are trying to manage it.

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Here is a lightly edited transcript of the conversation: 

“What’s Next Ab?” (Youtube): This is Canada, the country of dreams where everyone I have come across wants to move. I moved here in August 2022.   

Sarah Holder:  That’s Akanksha Biswas. She’s 29, works in advertising, and has a side hustle as a Youtube content creator. Akanksha is originally from India, but lived in Australia for years, until she made the move to Toronto two years ago. This is from a video on her channel where she talks about her decision to move to Canada. 

“What’s Next Ab?” (Youtube): There were obviously ups and downs in this journey, but I knew this was the right thing. 

Holder:  Akanksha told me – before the move, she had a clear vision of what her life could be like once she got there. 

Akanksha Biswas:  Canada always felt like a really attractive country because I know a lot of people who moved here and whenever I spoke to them, they always gave, like, really good reviews. I, and my partner, we thought, let's try out Canada and see how it is because the cost of living was supposed to be lower here.Holder:  But when Akanksha arrived in Canada, she quickly realized life there might be harder than she expected. It started with her housing search:

Biswas:  When I came here and started looking, it just felt like the prices were going up every single day. So one day we are seeing a place for 2,200 a month. The next day we would say, see the same listing about 50 higher.

Holder:  And then the panic starts to set in, you gotta find a place now, or yesterday. 

Biswas:  Exactly. That's what, that's what was happening.  

Holder:  Akanksha did eventually find a place. But she and her partner are paying higher rent than they expected. That’s forced them to cut back on some expenses and save less. And it’s got her questioning whether Canada is really the “country of dreams” she’d imagined… 

Biswas:  That made us reconsider like, long term, would it be feasible for us to live here, to stay in like, in a country where it's so hard to afford a house, or whether raising a family would be all right or not.

Holder:  Many young people like Akanksha are experiencing these kinds of cost-of-living strains. A post pandemic boom in immigration in some countries is exposing growing gaps between what’s happening in the overall economy — and at the individual level. And nowhere is that disconnect clearer than in the housing market.

Randy Thanthong-Knight: One common thread that we see across advanced economies, Canada, Australia, the UK, is record immigration levels colliding with existing housing shortages. 

Holder: Randy Thanthong-Knight is a Bloomberg economics and government reporter based in Ottawa. 

Thanthong-Knight:  Housing shortages have always been the issue. And so with the new demand coming in, that's just worsened the problem. 

Holder:  On today’s show, we talk with Randy about how decades of underbuilding is catching up with cities – just as they need even more homes for new arrivals. How we got here and what local leaders are planning to do about it – that’s coming up.  I am Sarah Holder. This is The Big Take from Bloomberg News. 

Holder: In the past few years – one country that’s seen a very rapid increase in new residents is Randy’s homebase of Canada. And while immigration has become a hot topic in the US, Randy says our country’s immigration rates actually pale in comparison to Canada’s.

Thanthong-Knight:  To put it in perspective, so for every 1,000 residents, Canada brought in 32 people over the past year and compare with just less than, fewer than 10 in the US.

Holder:  Canada’s government encouraged this population growth with policies that made it a lot easier for people to move there – like few limits on temporary migration into the country, and ambitious permanent immigration targets.  

When asked about these policies earlier this year, Canada’s Prime Minister Justin Trudeau was unequivocally supportive: 

Prime Minister Justin Trudeau (CPAC Broadcast): One of the things that Canadians understand is that immigration remains an incredible strength and force for Canada and for the Canadian economy. 

Holder: Canada’s embrace of immigration was partly driven by a desire to boost its economy – new migrants have long helped fuel the economic growth of other countries dealing with aging populations, declining birth rates, and labor shortages. 

Thanthong-Knight:  For decades, advanced economies used to be able to rely on immigrants to expand workforces and boost economic output. And more recently, these countries started grappling with the economic drag from aging populations. They started relying more on newcomers to fill in some of the shortages. So for a long time, even though there were more people coming in, um, sharing the pie in these economies, the size of the pie also grew larger and we ended up with bigger slices. But that's not what we're seeing right now. 

Holder: Randy says that while Canada's economy has avoided a recession and is growing -- many residents aren't seeing their own economic prospects advance at the same rate.  

Thanthong-Knight: If you're looking at a per-person basis, some households, some people, especially younger generations and immigrants themselves, they're not moving ahead at all. A lot of people in the younger generation look back and think wait, my life was better a year ago, or they were better off a year ago. And this leads to general anxiety that people are feeling dissatisfied with how the economy is going.

Holder:  And Randy says Canada's immigration and housing policies were not made with the current economic landscape in mind. 

Thanthong-Knight: There's nothing wrong with having an ambitious immigration policy, but that aspiration has to be matched with equally ambitious planning. Immigration-led population growth, especially at the pace and scale we've seen after the pandemic, I think requires a change in the way we do things, especially on housing. We can't rely on the same forces  hoping to, hoping that the market will eventually catch up. 

Holder: What Randy’s talking about is a problem that’s been driving the affordable housing crisis in cities all around the world: there isn’t enough housing supply to meet the demand. In Canada, recent immigration has only ratcheted up that demand. 

While 2.4 million people came to Canada in the past two years – the country added less than 500,000 units of housing. That means Canada absorbed a population larger than the entire state of New Mexico – while building barely enough to house the population of Albuquerque. 

Thanthong-Knight:  Immigration isn't really to blame for this housing problem. And I want to point out that this is also happening across a lot of advanced economies — in Australia and in the UK as well, that there are regulations that restrict higher density housing, there are rules from municipalities that don't really support growth, right? There's NIMBYism that doesn't really give way to new development. There's a lot of things that's going on, but overall, it's sort of create this environment where the country can't really build enough houses for this growing population, and when you add large influxes of immigrants in a short period of time that's sort of worsening the housing shortages that we've seen. 

Holder:  With supply so limited – homes on the market have become a lot more expensive to rent or buy. And Randy says that in Canada, wages and income growth haven’t kept up with these higher prices. 

Thanthong-Knight:  Millions of Americans are also facing a housing affordability crisis, but their real disposable income growth has stayed above the rise in home prices over much of the past two decades, right? But not so much in Canada or in Australia. Now, for example, the median price for homes in Toronto is now 1.3 million Canadian dollars. And that's nearly three times that of Chicago, a comparable US city. So you can see that housing affordability is not just about home prices, but also about income growth as well. 

Holder: Randy says that he's experienced the shock of Ottawa’s rising housing costs firsthand.

Thanthong-Knight: So, my rent, for example, went up 14% this year.

Holder: Wow.

Thanthong-Knight: Yeah, so, and that's to show what tumbling living standards look like for an average person. But for me, it's not going to be a dramatic change, right, but, it's about slow adjustment, cutting back on some expenses to make up for this higher rent and other housing costs that that we've seen and it's not just me, it's, it's my friends, it’s people that I spoke with, it's a lot of immigrants that are facing similar situation.

Holder:  Coming up after the break: since it will take governments time to build the millions of new homes needed –  some of them are focusing on what they see as a shorter-term fix: letting fewer people into their countries. 

Holder:  We’re back. Before the break, Bloomberg reporter Randy Thanthong-Knight was telling us that countries like Canada have a problem. They have a lot of people coming in, and not a lot of housing getting off the ground. One obvious fix? Build more. 

Thanthong-Knight: The Canadian government wants to add nearly 4 million homes by 2031 to restore affordability. But that means doubling the pace of average annual housing starts that we've seen in recent years. And similarly, the Australian government set a goal of 1.2 million new homes by 2029, for example. And the industry players there said that looks increasingly unachievable. 

Holder: Part of the problem is a construction labor shortage — something that the housing crisis can also exacerbate.

Thanthong-Knight: We've seen this playing out across these economies, and there's a dilemma. That's sort of a Catch-22 situation where we need more workers, skilled trades people to help build more homes. But at the same time, we need more homes to house these workers and many more. So where do you fix this first? 

Holder:  This seems like a vicious cycle. 

Thanthong-Knight:  Yes, it is. And part of the problem is, is a mismatch in labor demand and supply that we’ve seen right? It's, and the, also the underutilization of, of their skills. If we look at the type of jobs newcomers have, it's not as common to see skilled trades or carpenters or plumbers. And some of that has to do with certification, lack of recognition of foreign experience and training, uh, which adds to the barrier of newcomers going into those sectors. 

Holder:  How have Canadian political leaders responded to these issues?   What are they doing about the housing crisis?

Thanthong-Knight: The clearest strain from immigration that we've seen is in housing, and it, since it takes years to address this supply issues, especially when there's already an existing shortages, even before you started bringing in new people, we start seeing governments cutting back on the demand side of the equation. And that means limiting the inflows of immigrants. 

So for Canada, the government here set a target to cut the population of temporary workers, international students, and asylum seekers by 20% over the next three years, right? And that's roughly about half a million people. The Australian government is also cracking down on student visas. And this adjustment, I think, is an acknowledgement that there are limits to immigration fueled population growth and that once new arrivals sort of exceed the capacity of the country to absorb them, the standards of living actually started to decline.

Holder:  And the longer it takes to fix this problem – the more likely it is that immigration itself will become a convenient scapegoat. And that anti-immigrant sentiment may grow in these countries. 

Recently, a long-running Canadian poll showed a sharp drop in public support for immigration. Forty-four percent of respondents agreed with the statement “there’s too much immigration to Canada,” compared with just 27% last year.

Among people who said that Canada accepts too many immigrants, the most widely cited reason was that they may be driving up housing prices or making fewer homes available.

Thanthong-Knight:  We've already seen governments start to adjust some of the policies to respond to this backlash, right?And so the longer this type of problem goes on, and if somehow some political party uses an anti immigrant stance to win an election that could really reverse the course of what we've seen over the past years, right? That we, a lot of advanced economies have relied so much on immigration to stave off economic drag from, the economic drag from aging populations. And if that were to reverse, there might be longer term consequences.

Holder:  As for Akanksha, the 29-year-old Toronto resident we heard from earlier, she’s made a big decision: to leave Canada behind. She applied for permanent residence back in Australia and recently got good news: 

Biswas:  Last year we started thinking about it and then we just applied. We got the invite from Australia. So we were like, okay, we got it now. I think it's time to move. 

Holder:  But since Australia is facing many of the same housing challenges as Canada – I had to ask – is she worried about finding an affordable place there too? 

Biswas:  I actually yes, when we were thinking about moving back to Australia, I was considering the fact that whether I will be able to afford a house in Australia as well. Keeping Sydney aside, I looked at other other cities like Melbourne and Brisbane, and there are houses that are still affordable in those cities. It’s exciting, but I have no idea what's going to happen.

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