In Canada, the third-quarter population growth has reached historic levels, with a quarterly increase of 431,000 people! This marks a 1.1% growth rate, the highest since 1957. The annual growth rate is 1.25 million people, or 3.2%! However, this growth contrasts with a 22% decrease in housing starts from the previous year, posing a significant challenge for government and developers amid a housing deficit and high interest rates. According to BMO, the current rate of population growth would necessitate 170,000 new housing units every three months.

Alberta leads the country in population growth at 4.3%, contributing to record real estate prices in Calgary. The surge in population is predominantly in the Non-Permanent Resident (Non-PR) segment, which increased by 47% in three months, reaching a total of 2.5 million. This growth, along with other factors like infrastructure stress and rising rental rates, has raised concerns about sustainability and potential impacts on various sectors, including healthcare.

Despite the remarkable population growth, there are indications that the trend may peak soon. Notably, there is a decline in net permanent population growth, with approximately 500,000 newcomers offset by 100,000 people to various locations around the globe. Additionally, the largest interprovincial migration loss in 20 years happened this year with 13,000 people leaving British Columbia.

Factors such as a slowing job market and increased requirements for international students may contribute to a potential slowdown in population growth in the coming year. The job market has seen a significant decline from one million job vacancies to just over 600,000, a 40% decrease. Consumer insolvencies are on the rise, with a 26% year-over-year increase in October. Although this is still below pre-COVID levels, the dollar volume of these filings has surged by 90%. Business insolvencies are even more pronounced, spiking by 63% year-over-year, reaching the highest levels since 2011.

In the mortgage and bond yield landscape, markets are anticipating significant cuts in 2024 potentially as much as 1.25% expected by the end of the year. Bond yields have steadily decreased, prompting major banks to consider deeper discounts on fixed-rate mortgages. Mortgage growth has been weak, growing only 3.4% year-over-year in October, but there are signs of stabilization and increased demand, particularly for variable-rate mortgages.

However, the potential risks lie in the risk of re-acceleration in inflation, which could impact the Bank of Canada's decision-making on rate cuts. Although consumer spending and business insolvencies are expected to decrease, the overall health of the economy remains a concern. While Canada's debt levels are eye watering, Canadians actually have $6.5 dollars in assets for $1 of debt despite the pinch everyone is feeling, Canadians do have the ability to pay for housing, emphasizing their prioritization of mortgage payments even in challenging economic times.

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