As of the latest tally in 2022 – when inflation was red hot – Canada’s fertility rate fell to just 1.33 children per woman.Fred Lum/the Globe and Mail
Jonah Prousky is a management consultant and freelance writer who focuses on business, technology and society.
Canadians now spend more of their incomes on housing than almost any other country in the world. Between 1980 and 2020, housing prices in Canada rose by 746 per cent, far outpacing the median household income, which grew by less than half of that. Then housing prices soared another 50 per cent during the pandemic.
Meanwhile, the country’s fertility rate has been falling steadily, hitting historic lows in each of the past five years it was measured. As of the latest tally in 2022 – when inflation was red hot – Canada’s fertility rate fell to just 1.33 children per woman. For reference, a country requires a fertility rate of 2.1 to keep its population stable, without relying on immigration.
So how are these two phenomena – soaring housing prices and falling birth rates – connected? One study from the European Bank for Reconstruction and Development found that when housing prices rise 10 per cent, the birth rate among homeowners increases by 2.8 per cent, but falls by 4.9 per cent among renters.
So in Canada, where the majority of people in their child-bearing years rent, the country’s intractable housing crisis is leading people to have fewer children. That may not seem like a problem, but a low fertility rate could have severe economic knock-on effects, which the government will all but manifest if it fails to get more housing built, fast.
Naturally, multiple factors influence fertility rates. Demographers will tell you that several factors, including rising rates of education and employment among women, affect a country’s birth rate, too. Some even dispute whether housing costs have an impact on fertility at all.
But in general these opposing views are somewhat dated, and don’t necessarily reflect the latest polls and pandemic-time surge in housing prices.
And you have to look at this problem on a case-by-case basis. In Canada’s case, because of the extent of the issue, the cost of housing seems to play an outsized role. One Abacus Data study conducted last year found that a striking 55 per cent of young Canadians in a survey said the housing crisis affected their decision and timing to start a family. (Almost 900 of the 3,500 adults polled in the survey were under 35, representing the youngest cohort. The margin of error for a comparable probability-based random sample of those 18 to 34 is plus or minus 3.34 per cent, 19 times out of 20.)
Similarly, Statistics Canada found, in 2022, that 38 per cent of young Canadians (from the age of 20 to 29) believed they would not be able to afford to have children in the next three years.
Big deal, some environmentalists will say. A lower birth rate could spell lower carbon emissions, easing the effects of climate change.
That may be, but embracing depopulation would be a grave economic mistake. Consider Japan, which, apart from the small city-state of Monaco, has the oldest population in the world. Japan’s birth rate remains stubbornly low despite myriad attempts to increase it. It was last tallied at 1.21 children per woman – not far below Canada’s 1.33.
A shrinking labour force has strained Japan’s ability to pay for expensive social services that its aging population requires, such as health care, long-term care and pensions. Though its economy has grown slightly in recent years, Japan’s debt as a percentage of GDP is the highest in the world. And the country faces labour shortages in several critically important professions including teachers and doctors.
Unlike Japan, however, Canada has been able to expand its population despite a low fertility rate by ratcheting up immigration. But immigration cannot allay the ill effects of the country’s plummeting fertility rate forever.
The global pool from which to attract smart, employable immigrants is slowly shrinking. Africa is now the only region on Earth whose population is expected to grow by the end of the century. Meanwhile, the world’s population is expected to decrease in that time period. So in the coming century, rich nations – all of which have birth rates well below 2.1 – may be competing for the same small pool of working-age migrants.
Beyond immigration, there are a host of pro-natal policies that countries have devised to boost fertility. Governments in Asia have spent hundreds of billions of dollars to stave off looming population crises. Singapore, with one of the lowest fertility rates in the world at just 0.97, offers generous grants and tax rebates to parents with two or more children. But its fertility rate hasn’t budged.
It’s only a matter of time, it seems, before the Canadian government begins throwing big money at the country’s nascent fertility problem. The lesson from abroad is, don’t wait. Increasing the country’s housing supply today could be the best defence against a population crisis down the road.