A Real Estate Boom in the Making As Government Sets Ambitious Immigration Target
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Investors
A Real Estate Boom in the Making As Government Sets Ambitious Immigration Target
COVID19 posed a challenge before world economies, unlike the modern economies have ever seen. Canada was not immune to the onslaught of the pandemic. But, as Canada tries to get back on the track of progress, it has decided that addressing the acute labor shortages will be the first order of business.
Canada is aware of its ageing population and the need to bring in young workers to keep the country competitive on a global scale. Immigration Minister Marco Mendicino announced that the government would be welcoming upwards of 1.2 million people in the next 3 years.
Among the many economic benefits of immigration, a boom in realestate is undoubtedly one. Let’s deconstruct the impact of immigration on the real estate market.
Is Your Property Value Contracting Due to Decline in Immigration?
The recent drop in the real estate market is apparent to everyone. A superficial analysis may lead you to believe that this is an indication of a real estate bubble. But, a more in-depth analysis would help you understand the economic scenario that had led to the drop.
According to a StatsCan study, before the pandemic hit, demand was well over the supply in Canada’s key housing markets. However, as March hit, the economy halted, unemployment increased, and more importantly, immigration stopped. Every city in Canada has seen a decline in immigration, with major cities registering a reduction in immigration by more than 60%.
Rental Incomes are in a Nosedive Too
The reduced immigration has hit the demand for rental properties. Here’s how:
Limited Number of Renters
With historically low immigration numbers, there is a limited pool of people looking for rental accommodation. So, property owners have to either offer an attractive price or hold out till the market improves.
Short-Term Rentals Shifting to Long-Term
Services like Airbnb that primarily rent to travelers have been heavily hit due to negligible tourism. In such a case, their short-term properties have also shifted focus to long-term rental clients, increasing the supply in an already low-demand market.
The Positive Change & The Boom in Real Estate
The statistics show that immigrants keep the real estate market booming by creating more demand for home sales and rental properties. And the government is working to keep the labor market thriving by taking multiple steps:
- Increasing immigration by 2023 while accounting for the 2020 shortfall
- Providing ample support to assist applicants with the immigration process
- Offering a hassle-free way to permanent residency to people involved in patient care during the pandemic
- Improving focus on innovative methods to plug the deficiency of diverse labor force across Canada
The Inevitable Boom
With the aggressive immigration policy Canada is following, immigration levels will climb and the real estate market with it. So, if you are already invested in the market or planning to invest, do not get fazed by the temporary decline the market suffered due to the pandemic. In fact, the Canadian real estate market, with its strong fundamentals and growth potential, is already showing remarkable recovery and it is only going to get better.
