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Canada took in 431,645 new permanent residents last year, which topped a high in 2021 of 405,000.The Globe and Mail/iStockPhoto / Getty Images

Canada took in a record number of immigrants last year, a result of a federal plan to compensate for a lack of new arrivals in the first year of the pandemic, and to make up for the country’s aging population and holes in the work force.

The country added just over 437,000 new permanent residents in 2022, according to Immigration, Refugees and Citizenship Canada (IRCC). This topped the department’s target for the year, as well as the previous high of 405,000, reached in 2021.

Immigration now accounts for three-quarters of Canada’s population growth. The federal government’s immigration plan calls for the admission of 1.45 million more new permanent residents over the next three years, which is equivalent to 3.8 per cent of the country’s population.

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The majority of the permanent residency spots have been set aside for economic immigrants, a term for newcomers who either have money to invest, or specific desirable skills, or can demonstrate that they are capable of opening businesses.

The federal government has said immigration is crucial for the economy, and that it accounts for as much as 90 per cent of labour force growth in Canada.

But critics of the plan have raised questions about the effects of higher immigration targets on the country’s already-unaffordable urban housing markets. And it is unclear whether Ottawa’s plan will help make up for shortages of labour in low-paid fields such as accommodation, food services, retail and health care assistance.

NDP immigration and housing critic Jenny Kwan said the federal government has missed an opportunity to give temporary foreign workers and undocumented workers permanent resident status. This would give them access to taxpayer-funded health care and allow them to live and work anywhere in Canada, indefinitely. (Temporary foreign workers are typically restricted to one employer and not allowed to switch jobs.)

“The government must stop relying on vulnerable workers and give them the protection of permanent status and ensure their rights are respected,” Ms. Kwan said in an e-mailed statement.

The flood of new permanent residents is expected to bring new homebuyers and renters to communities across the country. That could increase activity in the residential real estate market, which has slowed since early last year, when borrowing costs jumped with a rise in interest rates.

“There is little debate that strong population growth goes hand-in-hand with strong real home price gains over time,” said Douglas Porter, Bank of Montreal’s chief economist.

Mr. Porter analyzed the relationship between population growth and home prices in 18 developed countries. He found that countries with the fastest population growth during the decade leading up to 2020 – such as New Zealand and Canada – had greater home price inflation than those where populations remained stable or decreased.

But, considering the rise in borrowing costs, Mr. Porter said he believes that the influx of permanent residents will not immediately create a new pool of homebuyers. “Just as last year’s large population increase was unable to avert a double-digit drop in home prices, another large increase in 2023 won’t keep home prices from falling heavily again this year,” he said.

The typical home price across the country is down 10 per cent from February, 2022, when the market peaked.

Where Mr. Porter does expect the surge in newcomers to make a difference is in the rental market, where borrowing costs are less of a factor. Rents have already risen sharply over the past year, and he expects increased competition will push prices higher still.

The largest share of immigrants usually end up in major cities in Ontario, followed by cities in British Columbia, Quebec and Alberta. Last year was no different. Just over a quarter of new permanent residents intended to settle in the Toronto region, according to the most recent data from IRCC, which cover January, 2022, through October.

The government has said its immigration plan includes placing new permanent residents in small towns and rural communities.

In past years, people from southern and eastern Asia accounted for the largest share of immigrants to Canada. According to the IRCC data, this continued to be the case during the first 10 months of last year. During that period, nearly 110,000 new permanent residents were from India, nearly 30,000 were from China and about 20,000 were from the Philippines.

Canada also admitted nearly 20,000 refugees from Afghanistan in the first 10 months of last year, up from 8,570 in 2021. Ottawa has promised to bring at least 40,000 Afghans to Canada, under a pair of resettlement programs introduced around the time of the Taliban takeover of Afghanistan in August, 2021.

IRCC could have difficulty handling the large numbers of new permanent residency applicants. It has been dealing with a backlog of applications since 2021, when Ottawa bumped up its immigration targets.

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