Immigrants are more likely to buy in large urban areas, such as Greater Toronto and Vancouver, where home prices have risen to above $1.12 million.
OTTAWA, ONTARIO — more
immigration is hoped to promote economic development and alleviate a
deteriorating post-pandemic labour shortage in Canada, but newcomers may add
fuel to a smoldering property market that the central bank has cautioned was
fueled by "a rapid rush of investors."
The government source indicated
that the Trudeau administration is on track to meet its goal of 401,000 new
permanent residents this year, and plans to increase it to 411,000 next year.
75% of Gen Z is keen to enter the
housing market.
Canada's successive governments
have relied on immigration to promote economic growth in response to a
declining fertility rate that hit a new low last year. As the pandemic may push
older Canadians to retire early, luring immigrants will become more and more
important. High-skilled immigrants, meanwhile, may be more likely to contribute
money to the economy and earn enough to compete for coveted housing. Increasing housing costs are a result
of low mortgage rates and a shortage of housing.
Immigration Minister Sean Fraser
told Reuters, "Canada needs immigration to create jobs and drive our economic
recovery." "It's not simply that one out of every three Canadian
firms is owned by an immigrant; newcomers are also helping to alleviate labour
shortages."
Increasing housing costs are a
result of low mortgage rates and a shortage of housing. Another element, especially
prior to the epidemic, was migration. According to official estimates, the
number of vacancies has doubled this year.
Inflation has reached its highest
level in 18 years, thanks to rising housing costs. Government promises to
reduce housing costs will take years to implement, and certain measures may
boost demand even more, according to analysts.
Stephen Brown, senior economist
at Capital Economics, says that immigration has a "conundrum" effect
on housing prices.
Nonetheless, continued
construction and a labour shortage justify further immigration. According to
Brown, Canada's labour force will "flatten" if immigration is not
allowed.
With most borders reopened, it is
possible that more immigrants will move to Canada.
Because of a labour shortfall in industry, the Canadian Manufacturers and
Exporters Association is urging the government to increase its objective for
economic class immigrants by 2030.
Since Trudeau assumed office in
November 2015, the benchmark home price has increased by 77.2 percent. His
government intends to offer a housing package to parliament, which would
include a $4 billion fund to speed up building plans in the country's main
cities.
According to Statistics Canada,
immigrants are most likely to buy homes in large urban areas, such as greater
Toronto and Vancouver, where home prices have risen above $1.12 million. According
to realtor data, the average property currently costs $762,500 nationwide.
According to Zillow, the average home in the United States is worth $312,728.
Rapid price increases are
expected to slow next year, while Reuters polled analysts predict that home
prices in Canada would rise 5% in 2022, making them less accessible.
The government fund's goal is to
build 100,000 new "middle-class" homes by 2024-25, and the money will
go to communities who can demonstrate they can speed up the process.
Economists believe that this
policy will be beneficial, but that other measures in the housing package will
stimulate demand even more.
According to real estate broker
Jodi Gilmour, the Peel region – which is part of the Greater Toronto Area – was
admitting around 45,000 newcomers per year before to the epidemic, but that
ceased during the pandemic due to border closures.
"Right now, we're witnessing
a rush of purchasers trying to beat the two factors that will affect their
position in 2022," she added, referring to rising loan rates and
competition from immigration.
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