What could the cap on international study permits mean for London's tight rental market?
Fanshawe projecting major international student declines for January, May intakes
Thousands fewer international students at Fanshawe College could bring some relief to London's rental market, but any positive impact will be temporary — and won't address the long-standing need for more housing, one London-based economist says.
The college is anticipating a 47 per cent fall in international Level 1 student enrolment for its January intake, and a 39 per cent drop in May, Peter Devlin, Fanshawe's president, told staff in late October.
Ottawa is slashing study permits amid concerns the uptick in international students has hurt housing and health care, and left those students vulnerable to exploitation. The government will issue 35 per cent fewer permits in 2024, falling another 10 per cent for 2025 and 2026 to 437,000 permits.
Fanshawe received around 11,700 permits for 2023, up from about 4,000 in 2018.
Mike Moffatt, senior policy director at the Smart Prosperity Institute, said he believed the cap would have a "substantial effect" on the housing market.
"Enrolment across Ontario colleges… are down, and we are seeing rent reductions in most of the province, disproportionately in areas where there are a high number of students," he said.
Rents in London rose more than 10 per cent each over the last several summers, however a similar increase wasn't seen this year, Moffatt said.
Average one-bedroom rent in London dipped to $1,797 in October, down 4.3 per cent from 2023, according to Rentals.ca. Two-bedrooms now rent for an average of $2,190, down three per cent from 2023.
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Coupled with lower interest rates, Moffat said the cap should ease market pressure, lower rents and address issues of overcrowding. However, structural long-term improvements are necessary, he warns.
"I do have a real concern we are buying ourselves some time with some of these changes, but we need to use that time, and we cannot think the housing crisis has gone away."
Devlin has expressed concern about the financial hit the college will take. International students pay roughly four times more than domestic students, whose tuition has been frozen for several years.
Some local developers are hopeful the cap, and lowering interest rates, will bring costs down and make it more financially viable to build.
"It's too high cost for us to match what's available on the market, but then what's on the market is also not selling," said Rashad Ayyash, a developer and landlord. "Material cost is too high. Labour is too high. Permits are too high. Land cost is too high. There's very little incentive."
Nearly 7,000 home sales have been recorded in London and St. Thomas this year, according to local realtors, down 26 per cent from 2017 and 35 per cent from 2021. Nearly 3,000 listings were active in October, up 132 per cent from 2017 and a whopping 247 per cent from 2021.
Median sale prices stood at $595,000 last month, down five per cent from 2021, but up 98 per cent from 2017.
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The city has approved more than 21,000 new units this year, but only issued around 2,800 building permits as it works toward a goal of building 47,000 new units by 2031.
Ayyash said those most impacted by the cap will be those who took out low interest mortgages and rented mostly to international students.
"Not only are their mortgage rates going to be higher, but now you might have a decrease in prices due to less demand from students."
Places4Students, which helps students find off-campus housing, hadn't seen a notable change in local listings, said Braedon Vanecko of the St. Catharines-based company.
"We're seeing very similar numbers to what we had last year," he said. "We're always reaching out to new landlords to try and have them list on our service."
Jacqueline Thompson, head of anti-poverty agency LifeSpin, wondered about the impact to low-income Londoners who board international students.
"There's a whole range of lower-income families able to survive because they accommodate those students," she said, including seniors and young families who will now find it harder to pay rent and buy food without that income.
She said international students in London will also be impacted by new, tighter restrictions, including reintroduced limits on work hours.
"International students are paying a heck of a lot of money to be here, and they don't have much left. We've had students doing placements with us where they have three students sharing a room," she said.
"I don't think it's going to free up a lot of space if there's two or three to a room. It's just going to make it harder for them to cover those rents."
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