Trudeau’s immigration cut will narrow housing gap, watchdog says

Canadian Prime Minister Justin Trudeau’s plan to restrict inflows of newcomers will narrow the country’s gap between housing supply and demand, according to a budget watchdog.

If Trudeau is successful in curbing immigration over the next three years, that would reduce the housing gap in 2030 by 534,000 units, or 45%, said the Office of the Parliamentary Budget Officer, which provides independent analysis to help lawmakers scrutinize the government’s activities.

While the slowing population growth may help reduce the severity of shortages, Canada’s housing supply would still fall short of demand by 658,000 units in 2030, according to the office’s report published Friday. It highlights the ongoing challenge of under-construction in a country that’s home to some of the world’s hottest real estate markets.

Trudeau’s government last month reduced its annual permanent-resident target by more than 20% and said it wants to halt population growth by shrinking the number of temporary residents – such as foreign students and workers – through an exodus of more than a million people.

The office, however, noted there’s “significant risk” to the projection in the government’s plan, particularly the estimated outflows. “The plan assumes that 2.8 million temporary residents will leave the country over the next three years,” equivalent to 93% of the group’s current population.