The Canadian government is curbing the exponential growth in the number of foreign students in the country, as they are increasingly blamed for a housing affordability crisis.
Canada, which has a reputation for being welcoming to newcomers, has placed a two-year cap on the number of international students it will grant visas to. In 2024 and 2025, all provinces are required to collectively reduce the international student population by 35 per cent, amounting to 210,000 fewer students. The cap excludes students pursuing masters and doctoral degrees.
Foreign students are a lucrative source of revenue for the country’s colleges and universities since, unlike domestic pupils, their tuition is unregulated by the provinces.
The new regulation, one of the strictest migration policies enacted by Canada in recent years, was prompted by “bad actors”, according to immigration minister Marc Miller, who has criticised the proliferation of shabby private colleges — some located in strip malls — across the country.
“[The schools] are the equivalent of puppy mills that are just churning out diplomas,” said Miller.
These schools target international students willing to pay high fees to obtain a Canadian education, a graduate work permit, and, if they qualify, permanent residency in a country with more opportunities than many of their birthplaces.
“Where I come from . . . there are things I could only get in my dreams that I see and experience every day in Toronto,” said Rajagokul Stalin, an Indian national who graduated from George Brown College, a reputable institution, in 2022, and now works in tech sales.
The move comes in the face of a political backlash to an inflated housing market. Rents have surged in recent years, with some — including Canada’s central bank — pointing at immigration as one cause.
“[Immigration] is one of the things putting pressure on the housing components of inflation,” Tiff Macklem, the Bank of Canada’s governor, said last week.
Forty-four per cent of respondents to a September poll from the Environics Institute said there was too much immigration to Canada. That is the highest level of opposition since the late 1990s. Of those who expressed doubt about immigrants, 38 per cent said it was because of their role in pushing up property prices.
Others have pointed to a country that has long had high home prices, and has done little to address a persistent housing shortage.
“Due to zoning regulations and land use restrictions, Canada has not been able to make enough homes in the few cities where the majority of the population lives and where immigrants can get jobs,” said Gilles Duranton, a real estate professor at The Wharton School at the University of Pennsylvania.
In June 2023, Canada’s population reached 40mn, up from 35mn a decade earlier. There were a record 1.1mn new residents in 2022, attracted by Prime Minister Justin Trudeau’s ambitious immigration targets. His government plans to admit 500,000 permanent residents by 2025, a figure that has steadily climbed from the 272,000 admitted in 2015, the year he was elected.
Canada has always focused on attracting highly skilled immigrants, but the student population has surged in the past decade. At the end of 2015, there were about 219,000 study permit holders in Canada, a figure that grew to more than 579,000 at the end of 2023. In the same period, Canada’s population increased 13 per cent, but growth in its housing stock has not kept up.
The number of private dwellings grew 5.7 per cent from 2016 to 2021.
Limited housing stock and high demand has propelled the average home price to C$657,000 ($487,000) at the end of 2023, up from C$390,000 a decade earlier, according to the Canadian Real Estate Association. Average home prices in Toronto and Vancouver are above C$1mn.
Ottawa on Sunday announced that it would extend a ban on foreign homebuyers until 2027, a move meant to curb speculation on properties which came into effect at the start of 2023.
In the Toronto area, a major hub for newcomers, the average rent for a one-bedroom apartment has jumped C$1,000 in the past decade to C$2,633 a month, according to the Toronto Regional Real Estate Board.
Meanwhile, rental vacancy rates across the country have radically declined and rental inflation has been persistent. Rising housing costs made up 53 per cent of Canada’s headline inflation in the fourth quarter of 2023.
“The college issue is real, but this [policy] comes as the government is scapegoating migrants for the housing crisis,” said Tanja Maleska, co-executive director of the Canadian Council for Refugees.
“It is not Canadian.”
Canada’s postsecondary institutions rely on foreign students to boost revenues, and have been processing more student visas each year.
“This growth in migrants was unplanned, and really caught the government off-guard,” said Mike Moffatt, professor of economics at the Richard Ivey School of Business at the University of Western Ontario.
Tuition is usually provincially regulated for domestic students, while international student fees are not subject to the same rules, and serve as a golden goose for postsecondary institutions.
One example is Sheridan College in the Toronto suburbs, where 38 per cent of students are foreign, and their tuition is C$8,103 per term, about six times the amount a domestic student pays.
Emails seen by the Financial Times show how much Canada’s universities stand to lose because of the cap. Sheridan College’s president warned staff that it would cause a loss of up to C$100mn in revenue in the next two years, projecting almost C$55mn in tuition losses next school year. The school has enacted an indefinite freeze on hiring and professional development to manage costs.
Sheridan declined to comment.
“It’s a question of trying to have our cake and eat it, too,” said Daniel Kingwell, a Toronto-based immigration lawyer.
“We don’t want to raise taxes that fund universities and colleges, we don’t want to raise tuition to the full market level, so we subsidise it with more and more foreign students.”
The federal government has announced plans to increase its housing stock by up to 450,000 in the coming decade. But with the country targeting to admit 500,000 permanent residents a year by 2025, new housing stock and the decrease in international students may not be enough to cool rental prices.
Macklem, the Bank of Canada’s governor, said: “The policies that were announced are relieving that pressure, but we will see how they play out.”
