Canada underestimating non-permanent resident count by nearly 1M: CIBC

Number of NPRs from 2017 to 2022 who overstayed their visa expiry higher than 750,000, it says

People walk on the grounds of the University of Toronto in Toronto, Ontario, Canada September 9, 2020. Picture taken September 9, 2020. REUTERS/Carlos Osorio
Canada is underestimating the number of non-permanent residents living in the country by nearly one million, a new CIBC Capital Markets report says. REUTERS/Carlos Osorio

Canada is underestimating the number of non-permanent residents (NPRs) living in the country by nearly one million, a new CIBC Capital Markets report says, making the need to solve the housing affordability crisis even more urgent.

CIBC deputy chief economist Benjamin Tal wrote in a report released Wednesday that official statistics are missing nearly one million people in their count of non-permanent residents due to gaps in the census and the fact that many residents stay past the expiry of their visas.

Statistics Canada's definition of non-permanent residents includes those with temporary work or study permits. The agency assumes non-permanent residents exit within 30 days of their visas expiring, but Tal says "the majority of those temporary residents don't leave after their visas expire."

"Between the clear understating of NPR counts in the census, and the exclusion of overstayers in the quarterly demographics statistics, the number of NPRs missing from official statistics used by planners is approaching one million," Tal wrote.

"The practical implication of that undercounting is that the housing affordability crisis Canada is facing is actually worse than perceived, and calls for even more urgent and aggressive policy action, including ways to better link the increase in the number of NPRs to the ability to house them."

Tal estimates the number of NPRs who overstayed their visa expiry date between 2017 and 2022 was north of 750,000.

"Statistics Canada's practice of assuming an exit a month after the visa expiry has resulted in materially understating population, housing, and service demand forecasts (especially in university cities and towns) well before COVID began," Tal wrote.

The gap of NPRs missing from Statistics Canada's census – something Tal notes the agency has acknowledged in the past – totals approximately 250,000. When it comes to the gap in the census data, he says many NPRs arrive from countries in which talking to the government is unadvisable. He also says there may be confusion for short-term visitors who fall into multiple categories.

"(The Canada Mortgage and Housing Corporation) uses the census data (not demographic division data) to derive its household formation forecast — a forecast that is used widely by planners all over the country," Tal wrote.

"And if your starting point is far too low, your forecast will be far too low, resulting in a suboptimal planning process."

Tal's conclusion that NPRs were being notably undercounted was part of his presentation on housing made to federal ministers at their cabinet retreat in Prince Edward Island last week. The federal Liberal cabinet wrapped up the retreat promising to heed calls from Canadians to fix the housing crisis, but without any specific new plans to do so.

Pressure has been mounting on the federal government, as well as provincial and municipal governments across the country, to address Canada's housing affordability crisis. Ottawa plans to accept 465,000 permanent residents into the country in 2023, with the immigration target growing to 500,000 in 2025.

A report by Desjardins economists released last week says all levels of government, as well as industry, have a role to play in addressing the housing crisis, something that must be done urgently. They note that the federal government should provide transfers to incentivize homebuilding, while also ensuring population growth is "at a pace that is sustainable and doesn't further erode housing affordability."

With files from The Canadian Press

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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