MNI DATA IMPACT: Canada Population Boom Aids Resilient Demand>

By Greg Quinn

     OTTAWA (MNI) - Canada's population is growing at a record pace, 

helping sustain housing markets and domestic spending the BOC cites as 

resaons to avoid matching Fed interest-rate cuts. 

     The population grew by 208,000 between July 1 and October 1 to 37.8 

million, the largest total gain on record. The percentage gain of 0.6% 

is also the highest in data back to 1971, Statistics Canada said 

Thursday from Ottawa. 

     More than four-fifths of the increase was people coming to 

Canada from abroad, including 104,000 immigrants and 82,000 

non-permanent residents. Growth coming from natural-born 

Canadians is expected to slow further because of the ageing 

population and low fertility levels, StatsCan said.

     British Columbia had the highest population growth at 0.7% in the 

third quarter while Ontario also showed some strength, mirroring the 

pattern of a housing boom that has raised questions about a correction. 

Sales and prices of homes in Toronto and Vancouver have surged in recent 

years, leading governments to toughen lending standards and impose 

foreign buyer taxes to curb speculation. 

     Even if rising population plays a role in making consumer spending 

more sustainable, there are signs of trouble. Consumer debts as a share 

of disposable income remain near record highs, as well as the share of 

incomes going to debt repayment. 

     BOC Governor Stephen Poloz held a 1.75% policy rate this year that 

has become among the highest in the industrialized world, in part 

because he doesn't want to re-ignite the housing market. He's also said 

domestic spending is holding up well amid population growth and a strong 

job market. 

     Household affordability has become a hot political issue for 

Liberal Prime Minister Justin Trudeau's government that was reduced to a 

minority in an October election. With average prices for homes in 

Vancouver and Toronto often fetching a million dollars, the Liberals 

pledged more support for low-income housing and tax measures to help 

first-time buyers. He also asked Finance Minister Bill Morneau to review 

whether a tougher "stress test" on mortgage lending should be relaxed. 

--MNI Ottawa Bureau +1 613-314-9647; greg.quinn@marketnews.com

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