The Headlines
More students,
more problems?
Canada has emerged as an attractive destination for international students, but why are they being blamed for the country’s housing crisis?
By Seb Murray
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In September this year, around 250 McMaster University students moved into a newly opened graduate-student residence situated in downtown Hamilton in Ontario, Canada. By January 2024, when the remaining units of the same 30-storey tower are scheduled to be completed, “10 Bay” will welcome more than 600 students, including those with families. By investing in such student digs, McMaster University is taking steps to help address Canada’s housing crisis.
This initiative comes at a time when the Canadian government is grappling with mounting pressure over the escalating cost of housing. Discussions are ongoing about potentially capping foreign student visas, which have grown exponentially in recent years. This issue not only threatens to tarnish Canada’s reputation as a safe haven for international students but also poses a financial challenge for its universities and colleges, which are job-focused institutions.
Official data highlights a surge in the number of foreign students with active visas, surpassing 800,000 in 2022, a sharp increase from just 275,000 in 2012. Canada has emerged as an attractive destination for international students, primarily due to its relatively straightforward process for obtaining work permits. This phenomenon has made foreign students a subject of heated political debate.
The Canadian Housing, Infrastructure and Communities Minister, Sean Fraser, said in August that the substantial rise in student numbers was putting pressure on some housing markets, highlighting the challenges posed by this growth. “We’ve got temporary immigration programmes that were never designed to see such explosive growth in such a short period of time,” he told reporters.
In response to Canada’s housing challenges, higher education institutions are taking proactive measures to ensure students have access to suitable accommodation. Looking ahead, for instance, McMaster University plans to begin construction on Lincoln Alexander Hall, another new undergraduate residence which is expected to house nearly 1,400 more students starting in 2026.
However, Bonny Ibhawoh, Vice-Provost for International Affairs at McMaster, appears to take issue with Fraser’s comments. “While some will suggest international students are contributing to the housing crisis, we disagree,” he says. “The housing crisis is happening in many communities, large and small, across the country. International students at public universities are not the cause of this much wider problem.”
McMaster initiated plans nearly a decade ago to construct three new residences, aiming to provide accommodation for both domestic and international students and guarantee residence spaces for all first-year students who desire them.
"The urgency of addressing the housing crisis is underscored by the Canadian government’s thinking on foreign student visas."
Unprecedented demand for education
The urgency of addressing the housing crisis is underscored by the Canadian government’s thinking on foreign student visas. The nation’s higher education sector has experienced a surge in international student enrolment, contributing significantly to university and college revenue, as international student fees can be three to 10 times higher than those for domestic students in certain regions, like Ontario. This is because international student places are not subsidised by provincial grants.
According to data from Immigration, Refugees and Citizenship Canada (IRCC), the number of foreign students holding valid study permits (visas) in Canada reached 807,750 by the end of 2022. Compared to the previous year’s enrolment of just over 617,000, this represents a year-over-year growth rate of 31 percent.
Moreover, the current enrolment figures are 27 percent higher than those observed before the onset of the COVID-19 pandemic. This growth in international student enrolment is not a fleeting fad either, as numbers have increased by 170 percent over the past decade, IRCC said.
“We are in a time of unprecedented demand for high quality education,” says Ibhawoh at McMaster.
Canada’s attractive immigration rules, such as the ability to work while studying and obtaining a two or three-year work permit after graduation, have drawn many international students. These rules provide students with an opportunity to gain permanent residency in Canada.
IRCC says India stands out as the primary source of foreign student enrolments in Canadian institutions, accounting for nearly four out of every 10 foreign students in 2022. Just under 320,000 Indian students held active study permits at the end of December 2022, reflecting year-over-year growth of slightly more than 47 percent, highlighting the strong educational ties between the two nations.
In addition to India, there is a significant growing presence of other nations in Canadian institutions, including the Philippines (with a surge of 112 percent in student enrolments), Hong Kong (up by 73 percent), Nigeria (60 percent) and Colombia (54 percent).
In contrast, China, which was the leading source of students for Canada for decades, now accounts for approximately 12.5 percent of Canada’s foreign enrolments. The 100,075 Chinese students with active study permits by the end of last year reflect a 4.3 percent decrease from 2021 levels, indicating a shift in international student demographics. This has been attributed to the impact of the pandemic and challenging economic conditions in China.
“Canada aims to attract 500,000 immigrants annually by 2025, to fill some of the vast job vacancies across the economy.”
Regulatory failure
Some experts suggest that the overall current situation is a result of government incentives. Canada aims to attract 500,000 immigrants annually by 2025, to fill some of the vast job vacancies across the economy. There is currently no cap on international student visas and, as the provinces are largely unwilling to increase grants to higher education institutions, they have resorted to enroling international students who pay substantial fees, thereby boosting their finances.
“I think it’s a regulatory failure,” McMaster University economist Arthur Sweetman told local newspaper The Globe and Mail. “If you tell people to go make money and here are the rules, people are going to make money and go right up to the edge of the rules.”
Nevertheless, some critics argue that the influx of international students is exacerbating the broader housing crisis in Canada. Concerns arise from the notion that a swift population growth is leading to increased demand, diminished supply and escalating prices, rendering homeownership unattainable for many Canadians and newcomers alike. As per data from the Canadian Real Estate Association (CREA), the average cost of a residential property reached $668,754 in July 2023, marking a 6.3 percent rise from July 2022. Prices have since softened following interest rate increases.
Despite this, the Canadian higher education sector strongly opposes the suggestion of capping foreign student visas. Universities Canada, a membership organisation, expressed its “deep concern” about recent comments conflating international students with the housing crisis. Its recent statement says: “International students bring important knowledge, diversity and skills to our campuses, communities and workforce. We must continue to welcome them to study at Canadian universities.”
It added that universities are constructing “thousands of new” housing units to accommodate students and offering resources and services to help students access off-campus housing. One of the ways governments can incentivise the creation of new housing is by offering loans with favourable terms and interest rates for targeted building projects, Universities Canada says.
The University of Toronto adds that discussions about housing have “unfairly focused on international students”, potentially harming Canada’s ability to attract foreign scholars to its shores. “We all benefit when talented international students choose to study in Canada… singling out international students as a primary driver of our current housing crisis hurts individuals and groups, and damages Canada’s reputation abroad,” it says in the statement.
Moreover, universities assert that international students bring strong economic and cultural benefits to Canadian society. Government data shows that international students contribute more than C$22.3 billion per year to the Canadian economy, surpassing exports of auto parts, lumber or aircraft. Additionally, they provide essential talent to support Canada’s future economic growth and counteract the country’s ageing population, contributing to labour shortages.
“Should international students choose to settle in Canada after completing their studies, these new graduates can become an important asset and actively contribute to the development of a strong knowledge-based economy,” McGill University tells QS Insights Magazine.
“Students who come from other countries make our community richer. They bring diverse perspectives that enrich the classroom experiences of all students,” adds Ibhawoh at McMaster University.
“They contribute to our community through placements in hospitals and other health-care settings and public institutions and private companies, and by conducting community-based research that improves life for everyone here.”
While critics say foreign students are contributing to the housing crisis, a lack of affordable homes is a problem for students as well, prompting institutions to roll out financial support for them. McGill University in Montréal says it “recognises the challenges international students can face when studying away from home” and is “committed to ensuring that qualified students from any geographic region are financially supported”.
For example, since 2013, the university has partnered with the Mastercard Foundation Scholars Program, which helps to provide access to higher education for young people who are committed to giving back to their communities.
While debates surrounding foreign student visas and their impact on housing look set to continue, universities say they’re committed to welcoming international students, recognising the significant contributions they make to Canada’s academic, economic and cultural landscape.
The delicate balance between addressing housing challenges and nurturing a diverse and vibrant student community will remain a critical concern for policymakers, educators and students alike in the coming years.