Growing and Building, Part 2: Power Projection
How Statistics Canada’s new population forecasts can improve PEI’s growth planning
After waiting nearly two years, Statistics Canada finally released its revised long-term population projections on Monday. The numbers released this week provide population forecasts for different growth scenarios for the next 50 years at the national level, and the next 25 years for each province and territory. Monday’s release had some pretty important insights for Canada’s growth over the next half-century:
- By 2073, Canada’s population will reach between 47.1 million (low-growth scenario) and 87.2 million (high-growth scenario).
- The population aged 85 and older could triple by 2073, and deaths will significantly outpace births over the coming decades.
- Across all growth scenarios, the populations of Newfoundland and Labrador, Nova Scotia, New Brunswick, and Quebec would continue to decrease as a share of Canada’s total population between 2023 and 2048 while the share of the population in western provinces would grow.
For Prince Edward Island, this new release allows the provincial government and municipalities to reflect on where the province’s growth is expected to head. Despite leading the country in percent growth since 2020, PEI’s population growth is expected to slow down considerably over the coming years, teetering just above the national growth rate.
The insights from Statistics Canada’s latest projections can support the implementation of Growing Together, the province’s new population growth framework. In this report, the provincial government estimated the Island’s population to reach 200,000 by 2030 based on research prepared by the Canadian Centre for Economic Analysis. The provincial government’s estimate appears to be somewhere between Statistics Canada’s high- and medium-growth, which predict the Island to reach 200,000 people by 2029 or 2031, respectively.
Statistics Canada’s projections also go a step further, forecasting which demographic components will contribute to the Island’s population growth over the next 25 years. As the provincial government hopefully reflects on its decision from February to bar certain temporary workers from permanent residency, there is value in identifying the role that the federal government thinks permanent, non-permanent, and interprovincial migration will all play over the coming decades. Using the M1 medium-growth scenario, the feds believe that: (1) permanent immigration will remain relatively stable; (2) interprovincial migration will decline; and (3) temporary residency will be negative over the next three years before returning to making minor positive contributions to growth.
As deaths continue to outpace births towards the mid-point of the 21st century, there may be a need for PEI to work with other orders of government to improve fertility through pro-natal policies (incentives for fertility, strong parental leave programs, etc.). This will take serious and careful consideration to learn from the successes and failures of similar strategies in other countries, while also ensuring that PEI’s approach does not take a turn to xenophobia or violating existing reproductive rights.
Household formation and housing demand
The province’s forecast of its population growth appears to be in line with those of the federal government, but how might this translate to projecting housing demand? When I try to forecast housing demand for a specific province or community, I tend to rely on household formation patterns from the 2021 Census of Population. Specifically, I tend to use headship rates, which indicate the share of the adult population that is listed as a head of their household, to determine the minimum new housing needed to keep up with growth. This method allows me to examine headship trends by age cohort, to identify segments of the population that are less likely to be their household’s maintainer (e.g., students, seniors).
You can see my detailed work here, but to make a long blog post short, PEI will need to see somewhere between 15,500 and 21,000 units just to keep up with growth — depending on which population scenario plays out. Given that the provincial government’s population modelling rests somewhere between the medium- and high-growth scenario, this means that the Island will need to see nearly 2,000 housing starts a year just to keep up with new residents.
In the new provincial housing strategy, the government has appeared to lowball the number of units required just to keep up with growth (1,670 per year in Building Together), saying that 2,000 units per year are what the province needs to get ahead of its population forecast. The provincial government has likely underestimated PEI’s housing demand because it uses a shortcut methodology to anticipate housing needs. Rather than applying a benchmark of current headship rates to long-term population projections by age cohort, the province just assumes that the average household size will grow to 2.4 persons per private household up from 2.3 in the 2021 Census.
Although it does not sound like much, this assumption is shortsighted because it relies on the suppression of household formation to notionally end PEI’s housing supply shortage. Increasing PEI’s average household size to 2.4 would require more young adults to live with roommates and parents while putting off major life milestones like starting their own families and buying their first home. It would also mean normalizing the unsuitable/crowded housing conditions faced by marginalized newcomers and students.
The provincial government is coming off of a few months of good news stories on the housing front. The Island saw its best first-quarter housing starts numbers ever, one of its best quarters ever for apartments, and one of its best year-to-date totals for rental housing construction in its largest urban centre.
This is a sign that recent provincial decisions on rental construction tax rebates are having an impact and that they will likely see further success as interest rates continue to fall and municipalities adopt new pro-growth official plans.
As PEI enters the second half of what is shaping up to be a good year on the housing front, the province should take the opportunity to celebrate the interim successes, learn from the new StatCan forecasts, and adjust their methodological assumptions to better reflect the housing needs of Islanders.
