By Andrew Allison, October 13 2023—
According to the Canada Mortgage and Housing Corporation, Canada is in a housing crisis and the federal Liberal government is going to solve it. One solution they have proposed comes from Housing Minister, the Honourable Sean Fraser, who suggests that a cap on international student visas would reduce strain on housing prices.
Rector of the Université de Montréal, Daniel Jutras, replied to the suggestion:
“The (housing) problem is real, the problem is serious, but it’s a problem that’s been developing over the past two decades as a result of structural issues that I think are not related directly to the influx of international students.”
If the view is that an increase in international students does not at all lead to an increase in housing prices, then the position is wrong. Both the number of people seeking housing as well as the amount of housing available determines the price of housing. Therefore, an increase in the number of international students will directly contribute to an increase in housing prices. If the demand for a good increases, then the price of that good as well as the quantity of that good rises. Housing is no exception.
As long as international students need to be housed then an increase in the number of international students will subsequently lead to an increase in the price of housing. How much international students contribute to the price of housing depends on their relative size as housing consumers (renters, buyers, etc.). McGill political science professor, Víctor Muñiz-Fraticelli gets it exactly right. He suggests that in small university towns, the effect may be large, but that “it’s completely absurd to blame international students in a city like Toronto, or Vancouver, or Montreal when they represent a tiny percentage of the population.”
Since it is true that a decrease in the number of international students would lead to a decrease in housing prices, should we be on board with the Liberal Party’s plan to cap international student visas? The answer is not so obvious.
Reducing the number of international students who are admitted into Canadian universities is one way that we could decrease the price of housing, but it’s not the only one. Fraser’s plan would decrease demand for housing but policies that would increase the supply of housing would also reduce prices. For example, the government could reduce costs for those who build housing, which they’ve already done with their GST break, or they could reduce regulations surrounding the building of housing. Such policies would reduce the price and increase the quantity of housing by increasing the supply of housing.
The plan which involves the deregulation of housing is one that could be undertaken right here in Calgary. There’s an interactive map that you can use which allows you to see how every part of Calgary is zoned. Any time you see a zone with an R and 1 in it, that is a zone which is exclusively or primarily dedicated to the construction of single-family homes.
Rezoning could allow other forms of housing like apartment buildings to be built. If areas were rezoned to allow for higher-density housing, the price of housing in Calgary would decrease, making housing more affordable for Calgarians, producing the same result (in terms of prices) as would decreasing the number of international students. Such a change would not be popular with those who already own single-family homes as the value of their home is likely to decrease with an increased supply of housing in the neighbourhood. While this would clearly be burdensome to single-family homeowners, a limit on student visas would be burdensome on international students. Policymakers must decide which group will be harmed when creating policies to reduce housing prices. Maybe it should be international students, but maybe it should be single-family homeowners. Just because a group contributes to increased housing costs, it’s not immediately clear that they should be the ones to suffer.
That serving the interests of various groups increases the price of housing seems to be understood by none other than the Right Honourable Justin Trudeau who notes that many groups including international students have been blamed for the housing crisis, and correctly admits, “Yes, there’s lots of different factors that go into this housing crisis.” Which groups must bear the burden of saving Canada from the situation we find ourselves in? Even though international students do contribute to higher housing prices, this alone does not tell us that they should be the ones to get Canada out of the housing crisis.
This article is a part of our Opinions section and does not necessarily reflect the views of the Gauntlet editorial board.