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As a result of Canadians’ desire to live better during the epidemic, the housing market is booming, and now another wave of buyers will join the rush to add momentum to the already overheated real estate market, according to Globe and Mail.
The federal government has raised its annual immigration target to its highest level ever, creating favourable and relaxed conditions for new permanent residents in Canada who need to fill job vacancies. These new immigrants will increase Canada’s population, while at the same time immediately increasing housing demand in major job centres and nearby cities.
This will further intensify housing competition at a time when national property prices have risen by 40 per cent over the past two years.
Douglas Porter, chief economist at the Bank of Montreal, who analyzed the relationship between population growth and house prices in 18 developed countries, said: “Canada’s strong population growth is a factor driving our house prices up faster than in many other economies.”
He found that house prices rose more sharply in countries with faster population growth than in countries with stable or declining populations.
From 2010 to 2020, the population of New Zealand and Canada grew by an average of more than 1% a year. In the case of Canada, much of this growth is due to immigration.
In the same decade, house prices in New Zealand have risen by an average of 7.9 per cent a year, while those in Canada have risen by an average of 7 per cent a year.
At the same time, countries with declining populations have experienced stagnation or decline in house prices. Japan’s population is falling by an average of 0.2% a year, and house prices are rising by an average of 0.2% a year.
One reason immigration may push up Canadian house prices is that Canadian policies cater to new immigrants with wealth and job skills. Many new immigrants come here with huge amounts of money or have enough expertise to make money quickly. And, like other capable people, they are willing to buy real estate.
Parisa Mahboubi, a senior policy analyst at C.D. Howe Institute College, and a migrant labor expert say integration is a challenge for all new immigrants. But, she said, “Economic migrants, especially those with Canadian experience or education, can quickly integrate into the labour market. This means that they can buy property earlier than other immigrants. “