On December 19, 2023, Statistics Canada released the latest figures on population growth across Canada. In just three months (July, August and September, 2023), Canada added over 430,000 people to our population. Just 4% of that number comes from births, which means that about 412,000 people arrived in Canada from other countries.
As of October, 2023, Canada’s population was estimated to be about 40.5 million people, which means that in three months, we added 1% to our population.
We don’t have the full 2023 stats as of yet, but Canada’s total population growth for the first nine months of 2023 (+1,030,378 people) had already exceeded the total growth for any other full-year period since Confederation in 1867, including 2022, when there was a record growth.
When population growth occurs, it means more demand for lots of things, including, of course, housing.
In our work with clients in Toronto and the GTA, we naturally talk a lot about market changes and we’re always trying to predict what’s coming next, whether you’re a buyer or a seller, a landlord or a tenant. We did a deep dive into these latest immigration numbers to come up with some insights into what is happening and what it means to real estate markets.
Let’s get into it!
How does Canada decide what immigrants to accept?
In Canada, immigrants are selected according to three broad objectives: to enhance and promote economic development, to reunite families, and to fulfill the country’s international obligations and uphold its humanitarian tradition.
If we wanted to talk big picture, more than half of immigrants arrive under the economic category. These immigrants are selected based upon their potential economic contribution to meet labour market needs, or to create economic opportunities by owning, operating or investing in a business or through self-employment. In 2021, more than half (56.3%) of recent immigrants living in Canada were admitted under the economic category, either as the principal applicant or the dependent.
About a quarter of the immigrants accepted are sponsored by family members living in Canada and the remainder mostly fall under the refugee category.
With more than a million people arriving in Canada in 2023, the question for us as real estate agents is where are they choosing to live?
Hello Toronto, Montreal and Vancouver!
We couldn’t find anything for 2023 or 2022, but according to Statscan, in 2021, over 9 in 10 recent immigrants lived in one of Canada’s 41 census metropolitan areas (CMAs), which are large urban centres of over 100,000 residents. As was the trend over the past 50 years, Toronto (29.5%), Montréal (12.2%) and Vancouver (11.7%) continued to welcome the most recent immigrants in 2021.
If the same splits continued in 2023, and it seems reasonable they would, that would mean that Toronto received over 300,000 of the one million immigrants to Canada. As of 2021, close to half (46.6%) of the population living in the Toronto CMA were immigrants and it isn’t as if the rest of the GTA isn’t popular as well! Immigrants made up more than half of the residents of four municipalities in the Toronto CMA: Markham (58.6%), Richmond Hill (58.2%), Mississauga (53.2%) and Brampton (52.9%).
According to 2022 results from the Canadian Social Survey, most new immigrants still value having family in the area, so the past popularity of Toronto and the GTA for immigrants means that new immigrants will naturally want to be close to family members who immigrated earlier to Canada. In addition, the location of jobs, businesses and education prospects are also among the top key factors considered by immigrants as reasons for settling in specific cities.
With the continued popularity of Toronto and surrounding urban centres for immigrants to the country, we naturally see additional pressure on both rental and housing prices as a result.
We know where most immigrants to Canada settle, but it’s also important to understand where they’re coming from to understand the type of housing they will look for in their new home.
Swagat to Canada!
As of October, 2022, the data around the most popular sources of immigration to Canada is quite clear. Asia, including the Middle East, remained the continent of birth for most recent immigrants (62.0%).
Almost one in five recent immigrants (18.6%) were born in India, making it the leading country of birth for recent immigration to Canada.
In contrast, the share of recent immigrants from Europe continued to decline, falling from 61.6% in 1971 to 10.1% in 2021. For the first time, India took the top spot as the primary place of birth of new immigrants to Canada (18.6% of recent immigrants from 2016 to 2021), followed by the Philippines (11.4%) and China (8.9%).
With nearly one in five recent immigrants being born in India, that officially makes India the country with the highest proportion of Canadian immigrants from a single place of birth since 1971.
Do immigrants rent or buy?
As of January 1, 2023, new legislation called the Prohibition on the Purchase of Residential Property by Non-Canadians Act came into force, which prevents non-Canadians from buying residential property in Canada for two years.
While this mean seem like that means all immigrants who are not yet Canadians can’t buy real estate, there are a number of exceptions that directly allow many immigrants to be able to buy real estate here in Canada. The most relevant current exemptions for immigrants include:
- Temporary residents studying in Canada, with a number of stipulations, the biggest of which is that they’ve been in Canada for five years.
- Temporary residents working in Canada, if they hold a valid work permit or are authorized to work in Canada, and have 183 days or more of validity remaining on their work permit or work authorization
- Refugees, if they have been given refugee protection or are a protected person under the Immigration and Refugee Protection Act
For immigrants who receive permanent resident status (typically the first step on the path to Canadian citizenship), buying real estate is absolutely permitted.
The question then becomes, do they buy real estate?
Census data from 2021 shows that the growth in recent immigrant renter households (+21.5%) was more than double that of owner households (+8.4%) from 2011 to 2021. We can extrapolate from this that data that immigrants are were over twice as likely to be renting versus buying.
This does not mean that no immigrants buy real estate but if we look at the 300,000 immigrants that likely arrived in Toronto in the GTA in 2023, about 200,000 of them entered the rental market and about 100,000 purchased real estate. Those are significant numbers and when we look at the demand side of the supply and demand equation, there is no question that immigration to the GTA has been fueling real estate markets and price increases.
Will immigration continue to impact real estate markets?
The answer to that is a resounding yes.
Almost one in four people (23.0%) counted during the 2021 Census are or have been a landed immigrant or permanent resident in Canada. This was the highest proportion since Confederation, topping the previous record of 22.3% in 1921, and the largest proportion among G7 countries.
Just over 1.3 million new immigrants settled permanently in Canada from 2016 to 2021, the highest number of recent immigrants recorded in a Canadian census.
Not only do we have high numbers of recently arrived immigrants, our national policy is to continue to bring in historic levels of immigrants moving forward. Canada aims to welcome 485,000 new permanent residents in 2024, 500,000 in 2025 and plateau at 500,000 in 2026.
The below chart shows a projection for the level of immigrants up to 2041, including the number of immigrants as well as the percentage of the population of Canada that will be comprised of immigrants.
Unless the federal immigration policy changes significantly, immigrants to Toronto and the surrounding areas will continue to be a major factor in real estate markets in those communities.
While predicting the future can be difficult, we do know that the demand part of the supply and demand equation for real estate prices will be heavily impacted by historically high levels of immigration over the next number of years.
Anyone who is predicting a drop in demand in either rental units or homes for sale should take this account. While more rural areas and smaller municipalities outside of the major urban centres may see a relative drop in demand as supply increases, it seems likely that Toronto and the GTA will continue to face mounting pressure on rent and sale prices.
If you’re considering buying or selling, whether it be Toronto or beyond, we’d love to use our understanding of what is coming to make sure your strategy and approach is sound! If that is appealing, don’t hesitate to get in touch.
