Immigration numbers in Canada have been underestimated by around 100,000 and the sector is playing a greater role in supporting the housing market in some of its largest cities, according to CIBC. Non-permanent residents — students, temporary workers and humanitarian refugees who are currently residing in Canada – play a key role in demand for new housing and in the rental market, particularly in Toronto, Vancouver and Calgary, says the CIBC’s latest Economic Insights report.
New immigrants make up 70% of the increase in Canada’s population and as half are aged 25-44, they represent the country’s economic engine with the highest employment levels and the most likelihood of starting families.
In 2013, non-permanent residents (NPRs) rose 22,000 to 774,000, with an annual flow equivalent to a record-high 30% of new immigrants the country gets each year.
The number of Canadians aged 20-44 rose by 1.1% in 2013, the fastest pace in more than two decades and almost double the Organization of Economic Co-operation and Development’s growth rate. Despite some concerns of overbuilding in the current housing boom, the ratio of housing starts to household formation – the rate at which people move – is not far from its long-term average of 1.03, indicating no signs of froth.
The ‘echo generation’ – the children of baby boomers – are buying fewer homes and with foreign workers set to face more barriers to come to Canada, the demand for new housing is likely to slow in future, although it will be partly offset by the country’s plan to raise the immigration quota by 20,000-30,000 a year, with an increased focus on labour market needs.
CIBC, which is Canada’s largest bank, says while it still sees some moderation in the growth of homebuilding, it expects an average rate of 190,000 starts per year up to 2016, more than 10,000 higher than its previous prediction.