Canada’s perennial & usually high flow of immigrants can be attributed to its unique economy, good weather and stable government. Newcomers pouring into this beautiful nation are mostly skilled, with the highest education levels and receive higher wages once they settle.
All reasons why these immigrants account for more than a fifth of the housing market in Canada. Canada’s real estate graph movement depends a lot upon the movement of the immigrant population into the country as they arrive with a considerable amount of wealth. Their influence is inducive to the development of exclusive and prosperous immigrant neighborhoods.
Global cities in Canada including Toronto, Vancouver and Montreal represent 76% of the international immigrants to Canada which is vital to the health of the national real estate market and also the economy. For decades, the flow of international folks’ has attributed to fast climbing property rates as they contributed a significant part to Canada’s population and bought properties all over Canada, that strengthened the overall housing market.
However, the recent pandemic made curtailed the population growth of the country to its lowest at 75,000 since 2015 as fewer immigrants looked towards settling in the country due to the pandemic restrictions. While this is a piece of sordid news for the real estate market, the effects can be felt until the initial months of 2021.
Metropolitan areas register a significant slowdown
If numbers are taken into account, metropolitan areas such as Toronto, Calgary, Montreal, and Vancouver contributed 60% of the inflows last year. But in 2020, these regions saw the biggest slowdown in immigration starting from the periods of March/April, where immigration levels were down to 60%, with other parts showing a decline of almost 50%.
Immigration numbers dropped further in June when only 7,135 permanent residents chose Toronto for setting up base there while Vancouver registered 3,190 residents only; not to mention of Montreal which saw a registration of only 1,205 residents. Reports have suggested that applicants for permanent residency were down 80% in Q2.
While real estate experts foretell that this decline in the immigrant population is temporary in nature as restrictions have now eased and the economy is on the way to heal itself. It’s too early to make such an opinion for granted as immigration numbers have hardly improved with autumn having set in already.
Effects of immigration decline on real estate market
The slowdown in immigration will greatly impact the rental and homeownership market. As the pandemic triggered record unemployment figures, rental demand has taken a backseat in places like Toronto, Montreal and Vancouver.
The luxury housing market will witness significant contraction as condo sales will take a hit. While the real estate market future is cloudy at present and people don’t know which direction they are going, they will be much more cautious to pull the trigger.
Real estate developers will have to resort to band-aid measures like price correction and getting creative in one or more ways. But these headwinds will carry a lot of positives for the real estate market. Pent-up demand, low-interest rates and nearly and 18% decline in housing prices which may increase the sale of homes in the coming months for first-time buyers.