Canada has set itself apart from other similar economies through its immigration policy, which has had a significant impact on the Canadian real estate market. In fact, Canada accepts nearly three times as many immigrants per person as the United States does. Despite the overall slowdown of Canada’s economy due to the coronavirus pandemic, immigration continues to play a crucial role in maintaining a stable economy, particularly in the multifamily market. As a result, Toronto has emerged as one of the prime investment locations in Canada.
Immigration brings several benefits to the real estate market, particularly in the multifamily sector. It increases the population, strengthens the workforce, and helps maintain a healthy balance between housing supply and demand. Moreover, immigration to Canada is on the rise.
To understand how immigration is shaping the Canadian real estate market, let’s explore some key factors:
- Home Ownership: For many families and individuals, home ownership represents their largest investment. It influences consumption, financial security, and overall economic well-being. Purchasing a home is a significant milestone for newcomers to Canada, reflecting their settlement and integration into the country.
- Supply and Demand for Housing Units: The number and distribution of immigrants in Canada directly affect the availability and demand for housing. The housing market has experienced a downturn due to reduced immigration, as fewer newcomers, temporary foreign workers, and international students are entering the country. This decrease in demand has impacted rental properties, including accommodations offered by platforms like Airbnb. Additionally, the absence of foreign investors in the market has led to a decline in the demand for expensive properties.
- Economic Factors: While immigration is not the sole factor driving real estate market expansion, it interacts with other economic factors such as job levels, population growth, supply, and demographics. Immigrant housing demand influences housing prices, as it increases demand alongside first-time homebuyers. When housing demand surpasses a restricted supply, prices naturally rise due to increased competition.
Despite the challenges posed by the pandemic, non-residents have shown a growing interest in owning real estate in Canada. The country’s political and economic stability makes it an attractive investment location. Estimates suggest that non-residents own a significant portion of properties in major cities like Toronto and Vancouver.
Canada continues to accept and approve applications for permanent residency, even during the pandemic. The government has implemented measures to ensure smooth immigration processes, with fewer border, visa, and immigration restrictions in place. In fact, Canada’s proposed immigration levels plan aims to welcome over 1 million new permanent residents in the next three years.
In the Greater Toronto Area and surrounding regions, immigrants own approximately one-fifth of all residences, demonstrating their significant presence in the housing market. According to surveys, newcomers typically spend three years in Canada before purchasing a property, with 75% of them having finances set aside for home purchases. Furthermore, it is projected that foreigners will acquire 680,000 properties in Canada over the next five years.
Unlike in other countries, permanent residency in Canada cannot be obtained solely through real estate investments. Economic integration, job indicators, and income levels are commonly used to assess immigrant settlement. However, analyzing home ownership rates reveals significant progress in social and economic integration within Canada’s immigrant community.
In conclusion, immigration has a profound impact on the Canadian real estate market. Recent reports indicate that home ownership rates among Canadian-born individuals are higher than those among recent immigrants. However, established immigrants who have resided in Canada for at least five years exhibit a higher home ownership rate, highlighting the positive long-term effects of immigration. Immigrants also tend to possess more expensive single-family detached homes, which contributes to the overall value of the Canadian real estate market. Additionally, those who obtain permanent residency through investment programs own more expensive residences compared to other immigration pathways, such as the skilled worker program or family reunification.