Immigrants play bigger role in supporting housing market
View of Okotoks housing that could boom if they swing a deal with Calgary for more water rights, in Okotoks on September 21, 2014.
Photograph by: Christina Ryan , Calgary Herald
Immigration plays a bigger role in the nation’s housing market more than many Canadians believe, according to a new report from CIBC World Markets.
“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,” said Benjamin Tal, CIBC World Markets’ deputy chief economist, who co-authored the report with Nick Exarhos. “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.”
The report said new immigrants account for 70 per cent of the increase in Canada’s population. With half of the new immigrants between the ages of 25 and 44, they represent the country’s economic engine, the age demographic having the highest employment levels and the most likely to start families, it said.
The number of Canadians aged 20-44 rose by 1.1 per cent in 2013. Over the past decade, the number of Canadians in this age group has risen 75 per cent faster than in the U.S., said the report.
“Healthier demographics are benefiting trends in household formation,” said Tal.
He said the ratio of housing starts to household formation in Canada is not far from its long-run average of 1.03, showing no signs of “froth.”
Only in Calgary do starts continue to show upward momentum, he said.
mtoneguzzi@calgaryherald.com
Twitter.com/MTone123
“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,” said Benjamin Tal, CIBC World Markets’ deputy chief economist, who co-authored the report with Nick Exarhos. “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.”
The report said new immigrants account for 70 per cent of the increase in Canada’s population. With half of the new immigrants between the ages of 25 and 44, they represent the country’s economic engine, the age demographic having the highest employment levels and the most likely to start families, it said.
The number of Canadians aged 20-44 rose by 1.1 per cent in 2013. Over the past decade, the number of Canadians in this age group has risen 75 per cent faster than in the U.S., said the report.
“Healthier demographics are benefiting trends in household formation,” said Tal.
He said the ratio of housing starts to household formation in Canada is not far from its long-run average of 1.03, showing no signs of “froth.”
Only in Calgary do starts continue to show upward momentum, he said.
mtoneguzzi@calgaryherald.com
Twitter.com/MTone123
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