Morning Market Brief: September 13, 2023

CIBC Capital Markets report highlights population discrepancy

A recent report from CIBC Capital Markets suggests that the official number of non-permanent residents in Canada might be underestimated by as much as one million. This has raised some concern about whether housing policies are robust enough to manage the rising demand.

• Underestimating the number of non-permanent residents. Benjamin Tal, deputy chief economist at CIBC, noted that the discrepancy is partially due to the absence of a comprehensive system to track individuals with expired visas who continue to reside in the country.
• Implications for housing and infrastructure. Since accurate population estimates are critical for development plans and budgeting, this level of underestimation could require roughly two years of additional building capacity to satisfy demand.
• Canada’s population growth trajectory. According to Statistics Canada, Canada’s population exceeded 40 million in June 2023. Immigration became the main source of population growth in 1995, with the population reaching 30 million in 1997.
• Housing starts in focus. Given the need to balance housing supply and demand, housing starts are an important element of increasing supply. In July, housing starts were 254,966 units, according to the Canada Mortgage and Housing Corporation.

There is an accepted lag between the time interest-rate increases take place and when the impact is fully felt by the market. In a similar way, there is a delay between when policies are implemented to increase supply and when that supply arrives on the market. For more insight into the challenges of counting Canada’s population and what this could mean for policymakers, and to help assess the implications it could have for your portfolio, please see the CIBC Capital Markets report.

Please contact your advisor to discuss how these announcements could impact your portfolio.