Ontarians on the Move, 2021 Edition. #1 -The Big Picture

First in (what I hope) will be a series on population growth, migration, and what’s going on with Ontario’s housing market.

TL;DR: Housing prices, like anything else, are a function of supply and demand. An underexplored demand driver of Ontario’s housing boom is the increase in the number of people moving to the province from both within and outside Canada, particularly international non-permanent residents.

Earlier this year, Statistics Canada released their population estimates for 2020. I wait in anticipation of this data every year.; mostly because I’m a giant dork, but partly because of how detailed it is. It shows, at a community level, the hows and whys of population change between any two Canada Days.

Between July 1, 2019, and July 1, 2020, Ontario grew by nearly 190,000 persons. This is higher than Ontario’s average growth over the past two decades but is down somewhat from the previous two years.

There are a few possible reasons why the growth figures started to spike in 2015–16, we’ll explore those in a moment. The obvious explanation for the dip in the 2019–20 numbers is COVID; we can explore that as well.

So where did those 190,000 or so people come from? When looking at population change at the community level, I like to break it down into five factors:

  1. “Natural” increases — the difference between the number of people born and the number of people who die in the year.
  2. Net international immigration — the difference between the number of people who immigrate to Ontario from other countries vs. the number of Ontarians who emigrate from other countries.
  3. Net “non-permanent residents” — the change in the size of the population of international non-permanent residents. These could be foreign students attending school, individuals on work visas, temporary foreign workers, etc.
  4. Net interprovincial migrants — the number of people who move to Ontario from other provinces vs. the number of people who move from Ontario to other provinces.
  5. Net intraprovincial migrants — the net number of people who move from one community in Ontario to another community in Ontario. For the province as a whole, this number has to be zero. For any specific community in the province, the number could be positive (suggesting they’re, on net, gaining people from other Ontario communities) or negative (suggesting they’re on net losing people to the rest of the province).

With all that in mind, here are the Ontario numbers for 2019–20:

Ontario’s population increase last year was largely a function of international migration, with net immigration leading the way, and the growth of net non-permanent residents playing an important supporting role.

Let’s compare the numbers to the previous year:

The big change between 2018–19 and 2019–20 is the drop in the growth of net non-permanent residents in the province. I’d be curious to know how much of that is driven by a reduction in the number of foreign students vs. the number of temporary foreign workers vs. the number of persons on work visas, but we don’t have that data. In any case, I suspect COVID is playing a big role in the change.

The data goes back to 2001–02, so let’s look at each of these categories and see if we can spot any trends

“Natural” Population Increases in Ontario

Absolute growth through “natural” population increases (as a side note, I really don’t like this term — can anyone suggest a better one?) has steadily fallen year by year. This isn’t because we’re having fewer babies, but rather that deaths are increasing due to an aging population.

In short, Ontario’s population growth is in spite of “natural” increases, not because of them:

Now THAT’s a trend.

Net Immigration Population Increases in Ontario

Here is the time-series:

There’s an increase here, but it’s not as large as you might expect. Year-over-year growth declined until about 2015, likely due to strong economies in other provinces (particularly Alberta and Saskatchewan) attract more international immigrants than Ontario. Things pick up substantially after 2015, likely due to a combination of an increase in immigration targets (first from Harper, then from Trudeau) and the oil price plunge making Alberta a relatively less attractive destination than Ontario.

Next, on to non-permanent residents.

Net Non-Permanent Resident Population Increases in Ontario

Now THERE is your change. This is why Ontario’s population has grown faster over the past few years.

To learn more about what might be causing this, I’ll be writing up a follow-up piece examining this phenomenon, with a particular focus on their ages and where they’re located. An increase in international students must be driving some of this… but how much? And what else might be going on?

And, last but not least, interprovincial migration.

Net Interprovincial Migration Population Increases in Ontario

During the oil boom, Ontario was losing 10,000–20,000 people a year, on net, to the rest of the country. Once oil prices collapsed, the flow reversed direction; I suspect a lot of that was due to Ontarians moving back home. Communities across Southwestern Ontario (in particular) saw significant outmigration to the oil patch; I suspect that migration back plays a supporting role in housing markets in London, Windsor, and Chatham-Kent starting to strengthen around 2016 or so.

So what have we learned… and what’s next?

There’s a lot of factors determining both the supply and demand for housing. Some, such as interest rates, deservedly get a lot of attention. Somehow, population increases are typically overlooked in the discussion, despite this being the most obvious source of demand for housing (more families equals more demand for places for families to live).

Since 2015, Ontario’s population has been growing rapidly due to a combination of three factors:

  1. A substantial jump in the number of net non-permanent residents.
  2. A less sizable, though real, increase in the number of net international immigrants.
  3. The oil price collapse, which caused Ontario from losing people (on net) to other provinces to gaining them.

In future pieces, we’ll explore these trends further and show what they mean at the community level (spoiler: the answer is “a lot”).

Next piece: #2 — One Million New Ontarians.

Senior Director, Smart Prosperity. Assistant Prof, Ivey Business School. Exhausted but happy Dad of 2 wonderful kids with autism. I used to do other stuff.