Student housing shortage becomes acute with record immigration flows

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Record arrivals of new immigrants have further fueled demand for rental housing

Published on March 31, 20233 minutes read

Residential towers in Toronto. Residential towers in Toronto. Photo by Frank Gunn/The Canadian Press files

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The record arrival of more than a million new immigrants and non-permanent residents (mostly international students) last year has further fueled demand for rental housing, while growth in rental supply has been insufficient.

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Large rent increases have been reported in cities large and small across the country, and this is affecting low-income households more. College and university students make up a large portion of the low-income population, so they face increasing difficulties due to a lack of affordable rental housing on or near campus. Additionally, most international students come from lower-income countries than Canada, making them even more vulnerable to rapidly escalating rents.

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Rental housing shortages are a big problem for students in big housing markets like Toronto and Vancouver, but shortages can be an even bigger problem in small college towns. The housing stock in less populous cities simply does not provide enough safe and affordable off-campus housing within a short commute. Students therefore have to compete for space with higher-earning would-be tenants.

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The housing shortage on and off campus is already inhibiting the growth of universities and colleges. In Sydney, NS, Cape Breton University has had to limit admissions to its two-year post-baccalaureate program due to a lack of housing options in a city of fewer than 20,000 people. The program was very popular with international students, but housing problems got in the way.

Until recently, the United States was the destination of choice for hundreds of thousands of international students. But political changes under former President Donald Trump meant the US was less welcoming of international students, prompting them to turn their attention to Canada, among other places.

Those international students who choose to remain will help address the looming labor shortage in Canada, as the pandemic has prompted many workers to retire earlier. But that’s a double-edged sword. On the one hand, tens of thousands of international students are needed to sustain innovation in engineering and other laboratories. On the other hand, they exacerbate the housing shortage.

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“International students have been hit particularly hard by not being eligible for the $500 boost in Canada’s housing benefit, which is designed to help households facing rising rents,” said Mike Moffatt, founding director of the Smart Prosperity Institute, in a current assessment of the federal budget for 2023.

The housing shortage for students has already caught the attention of the real estate industry. A Student Housing and University Real Estate Initiative (SHURE) conference will be held later in April at the University of British Columbia, bringing together representatives from universities, colleges, real estate management firms, investors, institutional landlords and others.

Numerous new student housing initiatives are in the works in British Columbia. For example, Vancouver Community College is building 3,300 apartments to provide students with affordable housing alternatives.

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The initiative capitalizes on a 2018 pledge by the British Columbia government to invest $450 million in 5,000 additional student housing units. A crucial part of the BC government’s plan was to allow colleges and universities to borrow for new student housing initiatives. Before 2018, such institutions (with the exception of UBC) were not entitled to do so.

In Hamilton, McMaster University plans to build a 30-story downtown academic center that will accommodate 600 graduate students. Accompanying the $100 million hub is another $150 million project that will provide 1,366 student beds. In addition, the mixed-use buildings will house supporting facilities such as

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  1. A home for sale in Mississauga, Ont.

    Canada’s housing market is not as gloomy as some forecasters are suggesting

  2. Apartments for rent in Ottawa.

    Canada’s rental housing market lags behind the US, causing many problems

  3. Condominiums in the Liberty Village neighborhood of Toronto.

    Housing demand means more condominiums, which benefits renters and investors alike

Universities across Canada offer an extensive portfolio of student accommodation and services. For example, McMaster provides 4,000 student beds in 13 dormitories, and UBC hosts 13,000 students in Vancouver and 2,120 students at its Okanagan campus.

Providing additional student housing should be a priority to attract the best talent from around the world to Canadian universities. Provinces like BC have taken steps to expand college housing, but much more is needed, particularly from the federal government, which regulates the influx of international students but doesn’t do much to support college housing.

Murtaza Haider is Professor of Real Estate Management and Director of the Urban Analytics Institute at Toronto Metropolitan University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website, www.hmbulletin.com.

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