By Nojoud Al Mallees in Ottawa
RBC says the recently announced cap on new study permits won't lead to an outright decrease in demand for rental housing from international students this year.
But a new report from the bank about the cap finds the expected increase in rental demand from international students could fall by about 50 per cent as a result of the policy.
Immigration Minister Marc Miller announced a temporary cap on new study permits over the next two years, as the federal government tries to get a handle on sharp growth in international student enrolments at Canadian post-secondary institutions.
The number of new visas handed out this year will be capped at 364,000, a 35 per cent decrease from the nearly 560,000 issued last year.
RBC says if the cap for this year is extended beyond 2025, it would lead to a decline in the number of international students in the country.
The report says that would relieve pressure on the rental market more meaningfully.
"In the meantime, post-secondary institutions and other stakeholders must find creative ways to grow the student housing stock amid challenges in quickly building new structures," wrote economist Rachel Battaglia, the author of the report.
The Liberals' immigration policies, including the international student program, have come under heightened scrutiny as the country experiences rapid population growth.
That growth, fuelled by permanent and non-permanent immigration, has added pressure to the housing market.
According to new data from Rentals.ca and market research firm Urbanation, average asking rent for all property types increased by 10 per cent annually to $2,196 in January, reaching another record high.
Rent prices in Canada soared last year as supply struggled to keep up with demand, leading to the lowest national vacancy rate on record since the Canada Mortgage and Housing Corp. began tracking that data in 1988.
The federal housing agency said in a reportlast month the vacancy rate for purpose-built rental apartments sat at 1.5 per cent during the first two weeks of October 2023, when it conducted its annual survey.
That was down from 1.9 per cent a year earlier, which at the time had been the lowest national vacancy rate in more than two decades.
The Liberal government has rolled out new policies since the fall aimed at increasing housing supply, including lifting GST charges on new rental developments.
It announced last month that it will invite post-secondary institutions to apply for low-interest loans to build student housing starting this fall.
Banner image: Immigration, Refugees and Citizenship Minister Marc Miller rises during Question Period, Tuesday, February 6, 2024 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
This report by The Canadian Press was first published Feb. 14, 2024.
