Immigration is supporting Canada’s housing market more than what’s widely believed due to the young age demographics of newcomers and understated official population projections of non-permanent residents, a new report from CIBC World Markets reveals.
The report states that new immigrants account for 70 per cent of Canada’s population increase, and that with half of new immigrants aged between 25 and 44, they represent the country’s economic engine.
“Ask any real estate developer in any of Canada’s major cities about the risk of overbuilding, and the first line of defence would be immigration and its critical role in supporting demand,” explained Benjamin Tal, CIBC Deputy Chief Economist, who co-authored the report with Nick Exarhos.
“This claim is more valid than widely believed. Not only has the rising share of young immigrants lifted demand for housing but, also, official population projections understate the actual number of non-permanent residents in the country by close to 100,000,” he adds.
After a hot housing market in 2011 and 2012, activity in Toronto has cooled off, while the trend in Vancouver has been broadly flat for about the past four years. Only in Calgary do house build starts continue to show upward momentum. But because those three cities take in roughly half of all Canada’s new immigrants, they are also benefiting disproportionately from the demographic lift new Canadians are providing, the report suggests.
Non-permanent residents – for example, students, temporary workers and humanitarian refugees who are currently residing in Canada – play another key factor in providing the housing market with an extra cushion, the report continues, explaining that this group also has a relatively higher propensity to rent.
Article published 28th November 2014