Immigration Boosting Real Estate

With numbers of non-permanent residents underestimated by around 100,000, demand is being boosted in housing and rental markets in Canadian cities, says a new report from the CIBC bank.

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, a leading bank believes.

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.

A “huge gap” in the official numbers for non-permanent residents from Statistics Canada’s census data and Citizen and Immigration Canada (CIC), means that household growth projections have been understated.

Benjamin Tal, CIBC Deputy Chief Economist, who co-authored the report with Nick Exarhos, says, “Ask any real estate developer in any of Canada’s major cities about the risk of overbuilding, and the first line of defence would be immigration and its critical role in supporting demand. It turns out that at least for now, this claim is more valid than widely believed.

“Not only has the rising share of young immigrants lifted demand for housing, but also, official population projections understate the actual number of non-permanent residents in the country by close to 100,000,” he says.

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, the report reports.

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