As part of a five year, $148-million international education strategy, the federal government has guaranteed $30-million to bring in an increased international workforce into Canada. They plan to diversify global recruiting efforts, in order to source foreign students from countries including Mexico, Colombia, Philippines, France just to name a few.
Whilst Canada is already a top source of foreign students, the large majority of them are represented by India and China. Last year, there were more than 172,000 study permit holders from India and more than 142,000 from China on December 31, 2018.
By building partnerships with a large range of countries, Canada will continue to bring in the top talent, diversify the workforce even further and grow our population. As immigration is known to be the largest factor driving the population growth, this will impact real estate considerably with changes and increases in household demand.
According to a study by Global Affairs Canada, international students spent more than $21-billion in Canada in 2018, significantly impacting the economy. Foreign study permit holders have also more than doubled since 2012. With an even higher inflow of younger and educated immigrants, the ageing workforce will be enhanced. Additionally, with escalating housing prices, universities cannot afford to house more students and local students are less willing to pay for luxury living. With an increase in wealthy, student immigrants and foreign home ownership, housing demand will continue to grow and the market will stabilise.
Increased short-term accommodation throughout Canada has caused fear that short-stay visitors will ultimately replace long-term tenants. Due to this, investors and residents have been anticipating Toronto’s short-term rental regulations. The zoning bylaw was supposed to take effect in June 2018, but has been on hold waiting on the appeal by landlords who feel short-term rentals are a residential rather than commercial property use.
Under the new regulations, landlords would be licensed for $50 a year and rental companies would pay a one-time $5000 fee, as well as a $1 per night booking charge.
According to a testimony by a senior city planner, these regulations won’t solve the city’s housing crisis. Whilst they may help stabilise the supply of homes and reduce nuisance issues, investors should not be worried regarding their return on investment, as this will remain high.
Additionally, Sarah Corman, a lawyer for appealing landlord Alexis Leino touches on the positives of short-term rentals providing accomodation of people visiting and travelling, and transforming their experience of the city. While these experiences may be short term, some may lead to extended or permanent stays, in turn increasing demand for housing overall.
Here at CONNECT, we offer free leasing and property management services for the first year. Our property management division will help you find long-term tenants, leading to the best returns and making real estate investing easy for our pre-construction condo investor clients.
A report by real estate firm Royal Lepage released on Wednesday shows us that condominium prices in the GTA area have risen more than 9% in the last year, and medium prices per square foot have increased to $743. In greater Ottawa, these appreciated the fastest among Canada’s largest market, rising 17.9% year-over-year to $395.
Baby boomers are downsizing, moving away from houses and looking into purchasing condominiums for low maintenance living. Millennials are also being priced out of the market for single-family homes, and beginning to purchase smaller condos. As these condo sizes shrink and demand becomes stronger, the price per square foot has gone up and will continue to increase driven by more popularity for these home types.
What this means?
Hold on to your condos! Not only are prices going up, but also people are adjusting to the B20 regulations introduced last year. This announced down payments of more than 20% to demonstrate affordability, originally causing a level of tension but now becoming the new norm. Particularly in Toronto, these regulations did not cause a negative impact with prices continuing to rocket up and the real estate market booming more than ever.
Further to this, as millennial’s are now more focused on factors like neighbourhood and convenience, they are willing to pay more for less space. It is worth noting that one bedroom units are now an average of $2260, up 1.8% from last month, making Toronto more expensive than anywhere else in Canada.
As we know, prices in Canada’s housing market are continuing to increase. Senior economist at Royal Bank of Canada, Robert Hogue, points to July sales numbers as testimony to the correction in the market being over. Activity was the strongest since December 2017, and July marked the fifth consecutive month of rising sales.
Mentioned in our previous article, things are definitely back on track for Toronto following the implementation of the stress test last year. Although Toronto was one of the less impacted cities, there was some hesitancy with buyers struggling to qualify purchases when prices are so high. In other good news today, Vancouver, Calgary and Edmonton, who saw a significant impact are now in early stages of turnaround.
Marc Desormeuaux, economist at Bank of Nova Scotia further emphasises that the housing market remains balanced. If it does maintain the previous growth, we will see a shift towards a sellers market. Additionally, ease in job creation, stimulative interest rates and a healthy population all remain very important influences for stability.