Abstract
Housing affordability has become a critical policy issue in Canada as shelter costs have dramatically increased. This study examines the impact of international students on the growth of real rents in Canadian census metropolitan areas (CMAs) from 2004 to 2018. Using study permit data as a proxy for international student numbers, we establish a causal link between the influx of international students and real rent growth. To address endogeneity and control for CMA-specific factors, we employ an Ordinary Least Squares (OLS) model and a shift-share instrument. Our OLS estimates suggest that international student growth accounts for 1.15 percent of real rent growth. Further, using a two-stage least-squares (2SLS) model for robustness, we find that a 1 percent increase in per capita study permit growth (“dppr”) leads to a 1.31 percent increase in real rent growth (“grr”). These findings are significant for policy discussions on housing affordability and the potential impact of the 2024 study permit cap.
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