Harbourwalk condos.Canadian real estate is saved? Immigration Canada recently announced that it will break the record of 1.45 million new immigrants in the next three years. Economists say this may not only pull the housing market out of the current downturn, help housing recovery, but also push up house prices in the long run.Please Visit: Harbourwalk condos to Get Your VVIP Registration Today!
On November 1, the federal government of Canada announced its immigration plan. Canada will welcome 465000 new permanent residents next year, 485000 in 2024 and 500000 in 2025. 1.45 million new immigrants will come to Canada in the next three years.
Economists say the new immigration deal could lift the property market out of the current downturn by boosting house prices and labour shortages in the home sector.
But Canada’s already tight housing stock will struggle to keep up with rising demand, but new immigrants with increased construction and construction skills will help increase housing supply, said Robert Hogue, senior economist at RBC Royal Bank.
“at present, we do not have enough construction workers in the market to build the number of houses we need, so this may be of great help to the market,” he said.
Ricardo Ricardo Tranjan, a senior researcher at the Canadian Centre for Policy alternatives (Canadian Centre for Policy Alternatives), agrees that immigration is necessary to generate economic growth, which can be achieved by building more houses.
“New immigrants will support all aspects of the economy, and architecture is one of them,” he said. “they will play an important role in the industry.”
Douglas Porter, an economist at BMO Bank, said that in the long run, population growth will also boost house prices, which may help the housing market out of the downturn.
Typically, in areas with strong population growth, house prices rise over time, increased demand pushes up prices and drives the construction of more homes, and household assets rise as housing prices rise. In areas where house prices are weak, population growth is usually little or no, he added.
“strong population growth is good for house prices,” Porter said.
But in the short term, the real estate market is still digesting the rapid rate hike by the Bank of Canada.
As borrowing costs soar, most new immigrants are likely to rent a house and then try to buy it when they arrive.
Skyrocketing rent prices may also make it difficult for new immigrants to save money to buy a house, Mr. Tranjan said.
However, the housing market is expected to collapse, and house prices are expected to fall by at least 30% by the spring of 2023, which will provide some relief for new immigrants who will be able to buy houses when they land.
Avery Shenfeld, an economist at CIBC Bank, said lower house prices would be offset by high interest rates on mortgages.
“it is hoped that cooling inflation will allow lending rates to be cut and relaxed in 2024 and open a window for some buyers who are now on the sidelines to step in,” he said. ”
RBC’s Mr Hogg says that while house prices in Toronto and Vancouver are unlikely to fall sharply to ensure affordable home ownership, they could ease pressure from the country’s core urban centres by forcing new immigrants to settle in other historically less settled parts of Canada.
But economists say the pressure to ensure that housing supply meets growing demand will increase. The record level of 1.45 million immigrants in three years will strain Canada’s limited housing stock and force governments at all levels to work harder to build more housing supply.
Ontario Governor Doug Ford introduced comprehensive legislation on October 25th that plans to build 1.5 million homes in the province within 10 years, an average of 150000 per year is a lofty goal, since Ontario has started construction of up to 100000 houses a year since 1987.
Another 285000 homes are expected to be built in Toronto by 2032.
A new Urbanation report found that in the Greater Toronto area, the number of apartment units built in the third quarter of 2022 reached an all-time high, with the number of new apartments under construction rising 45 per cent year-on-year. This provides more rental and purchase opportunities for those who want to enter the real estate market.
“the arrival of so many new immigrants has put pressure on all three levels of government to continue to remove barriers to help housing construction and give priority to supply,” Hogg said. ”
“in fact, the number of units built in our most densely populated Toronto market is at a record level,” Porter said.
In fact, he added, the housing crisis was caused not only by insufficient supply, but also by high demand during the epidemic.
Investor demand surged as interest rates were at historically low levels. Now interest rates are rising rapidly and investor demand is weakening, which is expected to open the door for first-time home buyers and new immigrants.