Canada's Condominium Magazine
Demographics is an irresistable force that shapes government planning at all three levels: housing, transit, infrastructure in particular.
With the announcement of 340,000 immigrants per year to Canada — the largest increase in immigration since World War I — the economy and housing industry will certainly boom — although, with the likelihood of housing prices and rent increases as developers and governments race to catch up to demand.
Good news for the economy; bad news for tenants and home-buyers
Although this is a good news move in terms of economic impact — after all, it will drive more housing construction and GDP will increase — there will be a sizable “lag” as inventories in new resident cities try to catch up to new demand. Infrastructure and transit will also strain until new systems can be built.
Toronto is the city of diversity, and this is our pride, but it also means, in the short term — for at least the next five years — housing and rent price pressures will increase. So will demand for housing. Inevitably, both developers and governments will respond, but, with unavoidable gaps between demand and availability.
As we reported, new condo prices for Q2 2017 rose to $816 per square foot on unsold inventory (largely on short supply of inventory against demand.) [See the Condo.ca feature: “New Condo prices up for Q3 2017 to $816 per square foot”>>]
53.3% of immigrants may settle in Ontario — up to 180,200 each year
Between 2006 and 2011, 1,162,900 newcomers made Canada their home. According to census data, 616,337 made Ontario their home — an average of 102,722 per year in that census period. This is set to increase, based on the new projections to as much as 180,200 each year for the next three years.
Currently, 80,000 people move to Toronto each year — while the population increases 108,766 each year. Now, these numbers are no longer certain, as the majority of immigrants, historically, settle in Toronto or Vancouver — the two markets with the highest prices and rent, as well as the lowest inventory and vanancy rates — so as many as 180,200 (up almost 100,000 by some estimates).
Short supply of both rental and condos for sale
Toronto, currently, only builds 2,000 rental units in a typical year. In the latest quarter (Q3 2017) had inventory of new condos at 7,618, 47% below the 10-year average inventory of 16,304.
All of this is good news for developers and the economy, and — because of the economic footprint, good for all Ontarians — but there is little chance housing prices will decline. It is near-certain prices will continue to press upwards on both housing and rental properties.
Good for the economy
Aside from the housing industry, all industries should see gains in this environment, including infrastructure construction. The Conference Board of Canada resoundingly endorsed the plan:
“Canada’s decision to increase immigration will help sustain long-term economic growth in light of its rapidly aging population and low birth rate,” said Conference Board senior vice president Craig Alexander.
“Introducing a multi-year levels plan will improve the ability of governments, employers, immigrant-serving organizations and other important stakeholders to successfully integrate newcomers into Canada’s economy and society.”