And that is because one way to deal with the housing affordability crisis in Canada is to find ways to boost national income — income being the denominator in the classic homeowner affordability ratio. From that perspective, this immigration policy could very well end up carrying with it more benefits than costs, and counterintuitively prove to be a development that could redress the inherent imbalances in the national housing market.
Our models show that when net international immigration flows are accounted for, the downward inflation impact is highly statistically significant. That is very encouraging — and why the Bank of Canada has taken a very even-handed approach to this issue, with Governor Tiff Macklem commenting on the supply-side benefits of an ambitious immigration stance.
Bottom line: Ensuring that we have a sensible immigration policy in Canada means using it as a tool to redress, not compound, the housing affordability crisis and a distorting real estate price bubble that just keeps getting bigger.
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David Rosenberg: Why immigration could be good for housing affordability in the long runImmigration drives up housing market demand in the short term, but will help boost national income in the long run. Read more.
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