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Canadian immigration is set to reach its highest annual rate in a century this year as at least 300,000 newcomers are expected, a fact Scotiabank says is a tailwind for Canada’s housing market.
While those new to Canada don’t generally make the leap into homeownership right away, notes Scotiabank Economist Adrienne Warner, sooner or later most do.
“New immigrants typically first choose rental accommodations, but eventually have homeownership rates similar to Canadian-born residents,” Warren explains in the bank’s latest Global Real Estate Trends Report.
The Canadian homeownership rate was 69 per cent in 2011, the most recent year Statistics Canada provides this census data for.
Canada’s hottest major housing market is also the country’s leading migrant destination, according to the Conference Board of Canada, a non-for-profit research organization.
Nearly a third of those 300,000 expected to settle in Canada are Toronto bound, notes Alan Arcand, the associate director of the board’s Centre for Municipal Studies.
“Toronto is the main… destination for immigrants in Canada and immigrants are the biggest driver of population growth today in Canada,” says Arcand.
“It’s important to realize that Toronto adds about 90,000 people a year to its population. So the whole CMA (census metro area) of Toronto grows by a city every year, a mid-size major city,” he continues, adding, “All those people coming need places to live, so that drives the housing market.”
This is why the Conference Board forecasts housing starts (a measure of how many units construction begins on in a given period) will waver between around 38,000 to 41,000 through the 2016-2020 period. Arcand says this is around the 10-year average.
Population age demographics also fosters housing demand, says Scotiabank’s Warren.
“The number of Canadians in their prime homebuying years is projected to continue to grow through the end of the decade, though at a slower pace than in recent years,” she explains.
