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.
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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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