With the pandemic taking a huge bite out of the number of newcomers arriving in Canada in 2020, market experts began to speculate about what the impact of this population growth slowdown would look like for Canadian housing.
The rental markets in the country’s largest cities and the investor-owned condos that make up a significant proportion of their rental stock were flagged as areas for immediate concern.
Indeed, both for-sale condos and rentals saw prices fall considerably during the second half of the year, with the precipitous drop in immigrants and non-permanent residents arriving in Canada identified as a major contributor to this decline.
But a consensus is now emerging among economists that a condo market resurgence is underway, particularly in Toronto where sales rose 64 percent annually in February.
While many factors are at play in explaining the soaring condo sales, TD Economist Rishi Sondhi believes Canadian population growth driven by an upswing in immigration will set the stage for a sustained rental and condo market rebound in the country’s major cities this year.
In an update published this month to TD’s housing market forecast for 2021, Sondhi wrote that immigrant-driven population growth will boost both rentals and rent prices. Newcomers, whether they’re permanent or non-permanent residents, often rent when they arrive in Canada.
This uptick in rental demand, in turn, will support condo investors who generally need the monthly cashflow generated by rent payments to hold on to their investments. Since summer 2020, declining rents have caused a large number of investors to offload their units, especially in Toronto, leading to falling resale prices after an influx of condo listings hit the market. A reinvigorated rental market would help reverse this declining price trend.
“A ramp-up in vaccine distribution should also support rental demand through better job markets for younger workers and more in-class learning at post-secondary institutions,” wrote Sondhi.
Other market experts have recently gone on the record to express optimism that big city condo markets will continue to bounce back this year.
As condo sales continued to surge in February, RBC Senior Economist Robert Hogue wrote that some of those buyers were likely investors “anticipating an eventual turnaround in the rental market.”
He went on to write that with buyer interest “quickly returning,” condo prices could “firm up if current trends persist.”