Looking ahead, immigrants are key to economic expansion as the province keeps getting older
Fewer immigrants managed to call B.C. their home in 2020, according to a new report.
B.C.’s population growth declined by a third last year, with the province welcoming only 56,757 new residents, the Chartered Professional Accountants of British Columbia (CPABC) found.
CPABC recently released the 2021 edition of BC Check-Up: Live, an annual report that looks at demographic and housing activity across the province and in each of its seven development regions.
The population problem
The report points out that travel restrictions and uncertainty around the COVID-19 pandemic led to B.C.’s lowest population gain since 2011. This hurt the province because it relies on newcomers to enhance economic growth and augment its aging population, notes Lori Mathison, president and CEO of CPABC.
“Without an influx of younger people or an increase in the fertility rate, B.C.’s population will continue to age,” Mathison says. “This will put increasing pressure on the health-care system and reduce the number of working-age individuals contributing to the province’s tax base.”
B.C.’s average age was 42.6 in 2020, up from 40.6 in 2010 and 37.9 in 2000. Natural population growth—births minus mortalities—added just 4,069 people last year, according to the CPABC report.
“That’s why it’s so important to attract immigrants from other parts of the world,” Mathison says. “They tend to be younger, with over 80 percent of immigrants aged 40 or under in 2020.”
New immigrants to B.C. will be able to take on important roles in the economy and boost its growth by creating more demand for products and services.
But there’s no need to ring the alarm just yet: Mathison expects that 2020 will be a one-time dip and that population growth will bounce back next year.
House it looking?
The slowdown in new residents did bring some relief for housing supply, with the gap between new immigrants and new residential units narrowing.
“This had minimal impact on the housing market, however,” Mathison says. “It was offset by surging demand for larger spaces, record-low interest rates and a longer-term supply issue.”
Mathison says these factors also drove up resale housing prices by 25 percent in the past year. With an anticipated return to strong population growth, the gap will only worsen, she adds.
“It will be important to encourage more housing developments to ensure housing is accessible and more affordable for both current and future residents.
The housing problem may also eventually deter new immigrants, Mathison reckons, especially when buying a single-family home is becoming “untenable” in southwest B.C.
The report also highlights economic concerns shared by the province’s CPAs. Coming in at second place—beaten by ever-present housing affordability—is consumer debt.
“Given [that] Canadians have significant mortgage debt, should interest rates increase, there are concerns that the situation may worsen going forward,” Matheson explains.
People across the country are eager to finance their homeowning dreams, with new mortgage debt growing by almost $18 billion in April, according to Statistics Canada. This set a record for the largest month-over-month increase, following a $12-billion increase in March.
Meanwhile, the current commodities boom could drive inflation up in Canada, forcing the Bank of Canada to hike rates. That would impact Canadians with significant debt and change their spending behaviour—a problem for B.C. because consumer spending is the largest component of the economy, Mathison observes.
“If consumers curb spending due to significant debt obligations, that will put downward pressure on the economy,” she says, adding that it’s important for the province to increase economic growth and productivity “so that residents can see increased incomes and manage their debt load.”
BC Check-Up: Live is one part of CPABC’s economic analysis of the province, alongside its BC Check-Up: Invest and BC Check-Up: Work, which examine the investment climate and employment trends, respectively.