Newcomers to Canada are a powerful force in Canadian real estate. Whether they’re here for the long haul or intend to stay for only a few years while they work or study, one thing’s for sure: they all need somewhere to live.
According to a recent survey released by Royal LePage, newcomers to Canada are responsible for as many as one-fifth of home purchases in Quebec. At the current pace of international migration, the brokerage estimates more than 100,000 Quebec homes will be bought by newcomers within the next five years.
Will the buying patterns of these newcomers contribute to rising prices? Yes, if a number of conditions are met (and they are being met right now).
There is a supply problem in Montreal, and home builders aren’t keeping pace with demand. If interest rates remain low, if the economy remains strong, if Quebec’s political situation remains stable, and if the world continues to see Montreal as a desirable destination to work, study or raise a family, then yes, it’s likely we will continue to see demand outstrip supply, and that means prices probably will keep rising.
Although many locals are gobsmacked by the city’s recent real estate gains, the fact is that Montreal’s got a lot of runway before it even comes close to the cost of Vancouver or Toronto. Unless prices balloon at a much faster pace, our real estate will still seem like a bargain to buyers from elsewhere for a long time.
The Royal LePage survey polled 1,500 people who had arrived in Canada within the last 10 years. It included such non-permanent residents as students, temporary workers and refugees, but did not include non-resident international buyers. The survey defined “newcomers” as people who moved to Canada within the past 10 years.
Three-quarters of the newcomers surveyed said they arrived in Canada with money in the bank for an eventual down payment on a home, and 82 per cent put down roots in the place they first arrived. (Challenging the popular perception that most newcomers here leave for other provinces, 83 per cent of those who arrived in Quebec said they chose to stay.)
Preliminary StatsCan numbers indicate more than 90,000 newcomers arrived in Quebec in the past year. About half are non-permanent residents here temporarily to work or study, or who have come as refugees. While most will begin by renting a home, both the Royal LePage survey and research by UBC geography professor Dan Hiebert suggest many of those who stay will ultimately wind up purchasing property here.
Hiebert’s research zeroes in on the impacts of immigration on housing markets. While he’s still parsing data from the 2016 census, he said the findings of the Royal LePage survey jive with the trends he found in the 2011 National Household Survey.
While only about a quarter of immigrants to Quebec had bought a home within five years of arrival, Hiebert found that given more time, newcomers to Canada were more likely than the average Canadian-born resident to become homebuyers.
Hiebert found there were big differences in home-buying patterns depending on where immigrants came from, and how they arrived. Some groups of newcomers were buying houses without mortgages, he said, while others were clearly struggling to find affordable housing in Canada. “There’s a huge difference in terms of how quickly groups find themselves purchasing a home,” he said.
Newcomers who came to Montreal from South East Asia, China or Korea were the most likely to buy a home within the first five years, Hiebert found, while newcomers from Saudi Arabia, Latin America, West Asia (including countries like Iran, Armenia, Afghanistan and Turkey), and those from Africa or Caribbean countries were most likely to rent.
Thirty-two per cent of immigrants who came under the family reunification program bought a home in Canada within the first five years. One-quarter of those who applied as an immigrant investor or skilled worker also were able to get into the real estate market within that time frame, while only 14 per cent of Canadian refugees were able to do the same.
Yet even Montreal’s refugees, who may have arrived with little but the clothes on their backs, were eventually able to save for a down payment. More often than not, Hiebert found, they did end up buying a home.
Although only 13 per cent of Montreal refugees were able to purchase a home within five years, after 20 years or more, more than 60 per cent owned their home, Hiebert said. That’s higher than the overall homeownership rate in Montreal, which was at 55 per cent in 2011.
“It’s a really amazing stairway to home ownership for refugees,” Hiebert said.