Vanishing immigrants spook housing market

October 21, 2020

In British Columbia, the first province to enact a foreign-home buyer tax to discourage housing sales to non-residents, immigration has plunged by 111 per cent in the first half of 2020.
In the second quarter, immigration to B.C. went negative with a net loss of 3,400 persons in the immigration flow.
Across Canada, total immigration was down 64 per cent in the second half according to Statistics Canada to 34,260 permanent residents—down from more than 94,000 in the same three-month period in 2019.
The second quarter of the year is usually the busiest period for international students, but this year only about 10 per cent of the regular volume was processed compared to the same period last year according to an August 20, 2020 report by RBC Royal Bank. The drop was described as “acute and not something that can be made up easily in years to come.”
The bottom line is that Canada’s population growth is slowing and this will impact the housing market, according to analysts. The first impact will be on rental markets, but the effect on housing sales and starts could be profound, analysts say.
“Weaker population growth is a major factor underpinning our downgraded forecasts for home sales, prices and starts across the country through 2021,” according to report from TD Economics.
The home ownership market will also feel the effects of the slowdown, “as fewer newcomers purchase properties and there is less demand for investor-owned rental units,” TD said.
In particular, investors whose rental units are being built over the next few years “will have a much tougher time finding tenants, partly on account of significantly slower population growth,” TD said.
In the first six months of 2020, Canada allowed 103,420 permanent residents into the country—far below government targets. In March 2020, Immigration Minister Marco Mendicino said the 2020 target was 341,000 with another 351,000 or so targeted to obtain permanent residence in 2021.