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Canada’s expected population growth will worsen the already limited housing supply and result in even higher home prices, according to a new report by Zoocasa.

The report analyzed historical population growth together with home price data and found that national home price growth exceeded population growth by “more than double or triple” in most years in 14 out of the past 18 years.

“…the more people who live in Canada, the more homes are needed, which will exacerbate the already limited supply of homes,” the report notes. “In that sense, the population does have an impact on the national average price because demand will increasingly continue to outweigh supply.”

It pointed out that Canada welcomed 437,180 immigrants in 2022—the largest number in Canadian history for a single year, according to Immigration, Refugees and Citizenship Canada. “At the same time, the national average home price soared to a monthly high of $804,900—a 31% increase from 2021,” the report noted.

Significant home price decline “unlikely”

With the country expected to take in over 465,000 new immigrants annually, rising to over 500,000 by 2025, the Zoocasa report predicts continued housing supply pressure in the coming years, which will apply upward pressure to home prices.

“Home price growth and population growth have simultaneously trended upwards and this is likely to continue at an even faster rate in the future,” the report says. “Based on the previous five years, home prices have grown unprecedentedly quickly, and though prices have levelled off from 2022, a significant downward trend is unlikely.”

Source: Canadian Mortgage Trends