Developed Countries Need Immigrants, But Housing Just Isn't Enough: Report

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Zinger Key Points
  • Canada has cut its immigration goals by 20% over the next three years in an effort to face its growing housing crisis.
  • Housing is becoming an unmanageable variable as top world economies try to counteract low birth with foreign workers.

As the boomer generation heads into retirement, certain countries need immigrants of working age to keep the productive economy running, generating tax income to support those living from pensions.

That’s especially the case in Europe.

According to Eurostat, the European Union's official statistics body, the continent will face a 6% drop in population by the year 2100 with a fertility rate of 1.53 live births per woman.

It takes a fertility rate of 2.1 to keep a population level steady.

Housing Is Not Enough: Housing shortages in most major developed economies are limiting those countries from counteracting demographic-led crises, per Bloomberg.

And a widespread lack of affordable housing is making it harder for these countries to receive the immigrants they need to bolster their economies.

Canada, for instance, had a yearly population growth of almost 2.4% last year, due to open immigration policies after pandemic-era restrictions were taken down.

Australia's population grew 3.7% in the past two years.

But population increases can fuel drops in GDP per capita, as is the case in 13 of the world's most advanced nations where populations increase and economic outputs don't. These include Australia, Canada, New Zealand, the UK as well as several top economies within the EU.

Read Also: Texas Governor Abbott’s Anti-Immigration Measures Spark Environmental Crisis Along Texas-Mexico Border: ‘It’s Been Destroyed,’ Says A Resident

Rising home prices, as well as increasing rents, are partly behind drops in living standards. In the U.S., prices of homes are expected to grow 4.2% on average during 2024, making it a good year for homeowners and a bad one for those looking to purchase their new home, as mortgage levels continue high amid high-interest rates.

Rising interest rates put a stop to a new home construction boom last year. The same situation has been replicated around the globe as interest rates were brought up to counteract widespread inflation following the Russian invasion of Ukraine.

Governments are having trouble keeping the rate of newly built houses in line with the rate of immigration. In Canada, Prime Minister Justin Trudeau's government is scaling down its immigration goals by 20% over the next three years in an effort to keep population growth realistic within the country's ability to host newcomers.

Benzinga's Take: Continuous strains in the housing sector can become a sticky hurdle against efforts to grow populations and fight demographics-led economic woes in developed nations. A loss in GDP per capita in advanced economies can mean bad news for industries relying on exports, including oil and gas, agriculture, manufacturing (including the automotive sector) and consumer electronics.

Some of the largest ETFs following these sectors are United States Oil Fund LP, USO, Vanguard Information Technology Index Fund ETF, VGT and Invesco DB Agriculture Fund DBA.

Now Read: Federal Reserve Dismisses Rate Hike Fears, Labor Market Cools, Apple Lures Investors With Record-Breaking Buyback: This Week In The Market

Photo by Vladislav Klapin on Unsplash.

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