Rents, interest rates could ease with temporary resident targets: economist

For the first time, the Canadian government will set targets for temporary residents allowed into the country. One economist says this could ease pressure on rents.

The federal government’s decision to introduce targets on the intake of temporary residents for the very first time will have a positive impact on Canada’s rental market and overall housing crisis, according to one BMO economist.

“We’ve been firm in our argument that Canada has had an excess demand problem in housing, and this is maybe the clearest example. Non-permanent resident inflows, on net, have swelled to about 800K in the latest year, with few checks and balances in place, putting tremendous stress on housing supply and infrastructure,” said BMO economist Robert Kavcic in a note to clients on Friday.

For the first time, the Canadian government will set targets for temporary residents allowed into the country.

Immigration Minister Marc Miller said this is being done to ensure “sustainable” growth in the number of temporary residents coming into Canada.

“Starting this fall, for the first time, we will expand the immigration levels plan to include both temporary resident arrivals and permanent resident arrivals,” Miller told reporters in Ottawa on Thursday.

Miller said as of 2023, Canada was home to 2.5 million temporary residents, who make up 6.2 per cent of Canada’s entire population. Over the next three years, the government plans to bring that percentage down to five per cent.

Kavcic said this would bring Canada’s population growth down significantly.

“If these targets are met, while net births and permanent resident inflows continue as planned, we judge that Canadian population growth could grind down closer to 1 per cent in the coming years from north of 3 per cent today.”