In a move to supplement workers and stimulate the economy, the Government of Canada announced that they plan to bring in over 1.2 million new immigrants over the next three years. Breaking that number down further, the federal government aims to accept 401,000 new permanent residents in 2021, 411,000 in 2022, and 421,000 in 2023. If all goes to plan, the number of immigrants accepted into Canada within the next three years will be the highest recorded since 1911.
This is in spite of COVID-19, which forced the country to close its borders to many hopeful immigrants this past March. That said, from March until August, Canada still accepted 128,425 newcomers. This says a lot about the country’s continuing commitment to immigration.
Speaking specifically to where these immigrants are landing, Ontario was the province with the most immigrants as of 2020, with 127,191 immigrants arriving in the province between July 1, 2019, and June 30, 2020. And this number is only expected to rise, thanks to a number of pilots and initiatives geared at easing the transition for immigrants hoping to settle in Ontario. By 2045–46, annual immigration in the province is projected to rise to 180,400.
This article explains what this projected influx of newcomers could mean for the economies and real estate markets in cities across Ontario and across the country, as well as two provincial programs currently underway that are geared at attracting and securing the residencies of economic class immigrants.
The economic importance of immigration
Immigration is key to factors like population growth, labour market, and long-term GDP growth. In Ontario, the population is aging and the birthrate is low. By 2040, it is projected that 25 percent of the population will be at least 65 years old. That’s up from 17 percent today, according to the Conference Board of Canada.
The downfall of this is that Ontario’s labour force is shrinking. During the next two decades, it is projected that 13.4 million people will leave the workforce, while only 11.8 million people will join it. The upshot is that immigration poses a clear solution. Newcomers are also credited with lowering health-care costs, keeping pensions stable, and lessening the tax burden. This is not lost on the federal government’s policymakers and it’s clear by the numbers. In 2019, Canada accepted 300,000 immigrants—up from roughly 250,000 accepted per year on average during the previous decade.
The impact of immigration on real estate markets
The pre-pandemic market
Immigration is critical to the strength of real estate markets in Ontario and across the country. A Royal LePage study released in 2019 found that newcomers accounted for one in five home purchases. Looking forward, that’s 680,000 homes over the next five years.
Speaking specifically to Ontario, approximately 46 percent of immigrants to Canada choose to settle in the province and approximately 29 percent become homeowners. Newcomers are projected to purchase 286,000 homes over the next five years at the current rate of migration, with 88 percent believing that homeownership is a worthy investment and 82 percent coming prepared with savings to eventually purchase a home.
Finally, 60 percent of newcomers to Ontario rent their first home, while 16 percent opt to purchase. This bodes well for Ontario’s residential segment in general—but more specifically, its multi-family rental segment.
The post-pandemic market
The coronavirus pandemic has thrown a wrench into the market as we know it. According to the Toronto Star’s Nicholas Keung, only about 60 percent of the 341,000 immigrants it had targeted are expected to arrive in Canada this year. While this may not impact the housing market in a dire way in the short-term, there will be significant repercussions long-term, if the virus persists.
Not only will a sustained drop in immigration numbers have harrowing consequences on Ontario’s commercial and residential real estate segments, but it will also negatively impact short-term rentals. In fact, it already is, with much of the immigration decline owning to non-permanent residents, such as international students, who tend to rent condos and multi-family apartments.
Fortunately, the provincial government realizes the gravity of decreased immigration and there are programs underway to fortify Ontario’s immigration numbers.
Economic programs to encourage immigration
Ontario Immigrant Nominee Program
The Ontario Immigrant Nominee Program works in partnership with the Government of Canada through Immigration, Refugees and Citizenship Canada to recognize and nominate people for permanent residence who have the skills and experience the Ontario economy needs.
The Ontario Immigrant Nominee Program accepts applications under streams including in-demand skills, PhD and master’s graduates, French-speaking skilled workers, human capital, skilled trades, and entrepreneurship.
This year, the quota of OINP was 7,600 nominations, which was met in November. Additionally, the program is now inviting candidates to express entry systems for the human capital, French-speaking skilled worker, and skilled trades streams.
Rural and Northern Immigration Pilot
The aim of the federally funded Rural and Northern Immigration Pilot is to encourage and facilitate skilled foreign workers to achieve permanent residency in any of the participating communities. In Ontario, those communities include Sudbury, Timmins, North Bay, Thunder Bay, and Sault Ste. Marie.
For more details on the economies and real estate segments in these submarkets, take a look at Crescendo Equity’s recent blog article, which outlines the top rental sub-markets to invest in Ontario in 2020.
Top cities for newcomers
Though Niagara is largely known as a tourist hub, an increasing number of newcomers to Canada are choosing to settle in the region. And for good reason. Last year, Maclean’s ranked Niagara-on-the-Lake the second-best community for new Canadians, due to affordable cost of living, a relatively natural unemployment rate (4.7 percent in 2019), and steady growth at an infrastructural level.
According to the most recent census in 2016, there were 67, 190 immigrants in Niagara, accounting for 16.9 percent of the population. And this number is forecasted to rapidly rise, as Niagara continues to create jobs, create affordable housing supply, and encourage immigration to the region.
In 2014, the City of Hamilton declared it a sanctuary for immigrants. Today, one in four people in Hamilton was born outside of Canada, 3,000 to 4,000 immigrants arrive in Hamilton every year, and the city is also home to about 5,000 international students, many of whom attend the city’s prominent post-secondary education institutions, such as McMaster University and Mohawk College.
Last year, Maclean’s ranked Hamilton the second-best community for new Canadians, due to affordable cost of living, a relatively natural unemployment rate (4.7 percent in 2019), and steady growth at an infrastructural level—including improved public transportation to the area, road improvements, and the development of three new hotels.
Hamilton boasts great liveability in addition to strong support for its immigrant community and future immigration. Information via the Hamilton Immigration Partnership Council recently revealed that of recent immigrants living in Hamilton, 35.2 percent have university accreditation at bachelor level or above, with the most common field of study being engineering and engineering technology for newcomer males, and healthcare and business and administration for females.
Greater Sudbury has one of the most affordable real estate markets in all of Canada, making it an ideal place to settle for newcomers to Canada with plans to purchase or rent their own homes. The region also has plenty of job potential—most notably, in its mining industry, but also in other industries, including education, health, retail, and construction. Speaking to the latter, the city plans to spend $55 million on roads, $19 million on bridges, and $22 million on water-wastewater infrastructure in 2020—a move that will not only create jobs but improve liveability and access to the city. There are also a growing number of franchising opportunities in Sudbury, as the urban centre continues to expand and cater to its rising population.
Between 2017 and 2018, Sudbury welcomed 189 immigrants. This number has been steadily rising since 1981. Sudbury is one of the communities participating in the above mentioned Rural and Northern Immigration Pilot.