Immigration Is Up. Housing Supply Isn’t.

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This is Canada, the country of dreams, where everyone I have come across wants to move. I moved here in August twenty twenty two.

That's A Kanksha biswas. She's twenty nine, works in advertising and has a side hustle as a YouTube content creator. A Kanksha 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.

There were obviously ups and downs in this journey, but I knew this was the right thing.

A Kankshaw told me before the move, she had a clear vision of what her life could be like once she got there.

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. And my partner we thought, let's try out and then see how it is, because the cost of living was supposed to be lower heel.

But when a Kancsha arrived in Canada, she quickly realized life there might be harder than she expected. It started with her housing search.

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 twenty two hundred dollars a month. The next day we would say, see the same listing about fifty dollars higher.

And then the panic starts to set in. You got to find a place now or yesterday exactly.

That's what was happening.

A Kansha 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.

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

Right or not. Many young people like a Kancsha are experiencing these kinds of cost of living strains. The post pandemic boom and 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.

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

Randy tenthong Night is a Bloomberg Economics and government reporter based in Ottawa.

Housing shortages have always been the issue, and so with the new demand coming in, that's this worsen the problem.

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'm Sarah Holder. This is the big take from Bloomberg News. In the past few years. One country that's seen a very rapid increase in new residence

To put it in perspective, so for every one thousand residents, Canada brought in thirty two people over the past year and compare with less than fewer than ten in the US.

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 support One of the things that Canadians understand is that immigration remains an incredible strength and force for Canada and for the Canadian economy.

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

Randy said 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.

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 generations to 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 that there were dissatisfied with how the economy is growing.

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

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 rely on the same forces hoping that the market will eventually cash.

Up 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 two point four million people came to Canada in the past two years, the country added less than five hundred thousand

The 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 economy in Australia and in the UK as well. That there are regulations that restrict higher density housing. There are rules from municipalities that doesn't really support growth, right, there's nimbiism that doesn't really

With supplies, 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.

Millions of Americans are also facing 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 one point three million Canadian dollars, and that's nearly

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

So my rents, for example, went up fourteen percent this year.

Wow. Yeah.

So and that's to show what does 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 rents and other housing costs that we've seen. And it's not just me, it's my friends, it's people that I spoke with a lot of immigrants that are facing a similar situation.

Coming up after the break. Since it will take government's 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. We're back before the break, Bloomberg reporter Randy Tanthong Knight was telling us the 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.

The Canadian government wants to add nearly four million homes by twenty thirty one to restore affordability, but that means doubling the pace of average annual housing starts that we've seen in recent years. Rights and similarly, the Australian government set a goal of one point two million new homes by twenty twenty nine, for example, and the industry players there said that looks increasingly unachievable.

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

We've seen this playing out across these economy and there's a dilemma, sort of a cash twenty two situation where we need more workers skew 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?

This seems like a vicious cycle.

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

And how have political leaders responded to these issues? What are they doing about the housing crisis?

The clearest strain from immigration that we've seen is in housing, and it 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

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

We've already seen government started to adjust some of the policy to respond to this backlash. And so the longer this type of problem go on, and if somehow some political party use anti immigrant stands to win an election, that could really reverse the course of what we've seen

As for a Kancia, the twenty nine year old Toronto resident we heard from earlier, she's made a big decision to leave Canada behind. She applied for permanent residents back in Australia and recently got good news.

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.

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?

I actually yes.

When we were thinking about moving back to Australia. I was considering the fact that I will be able to vold a house in Australia as well. Keeping Sydney aside. I looked at 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.

Thanks for listening to The Big Take podcast from Bloomberg News. I'm Sarah Holder. This episode was produced by Adrianna Tapia. It was edited by Caitlin Kenney and Malcolm Scott. It was mixed by Blake Maples. It was fact checked by Jessica Beck. Naomi Shaven is our senior producer. Our senior editor is Elizabeth Ponso. The cole Beeamster Bor is our executive producer. Sage Bauman is Bloomberg's head of Podcasts. Please subscribe and review The Big Take wherever you listen to podcasts.