Immigration: the secret driver of canadian property?

Toronto, Canada Photo: Phil Grondin

New immigrants account for 70 per cent of the increase in Canada's population. With half of the new immigrants between the ages of 25 and 44, they represent the country's economic engine, the age demographic having the highest employment levels and the most likely to start families, the report says.

The number of Canadians aged 20-44 rose by 1.1 per cent in 2013, the fastest pace in more than two decades and almost double the Organisation of Economic Co-operation and Development's growth rate. Over the past decade, the number of Canadians in this age group has risen 75 per cent faster than in the U.S., the report notes.

After a hot housing market in 2011 and 2012, activity in Toronto has cooled off, while the trend in Vancouver has been broadly flat for about the past four years. Only in Calgary do starts continue to show upward momentum. But because those three cities take in roughly half of all new immigrants, they are also benefiting disproportionately from the demographic lift new Canadians are providing, says Mr. Tal.

Non-permanent residents -- students, temporary workers and humanitarian refugees who are currently residing in Canada - play another key factor in providing the housing market with an extra cushion, the report says.

"Ask any real estate developer in any of Canada's major cities about the risk of overbuilding, and the first line of defense would be immigration and its critical role in supporting demand," says Benjamin Tal, CIBC Deputy Chief Economist, who co-authored the report with Nick Exarhos.

"It turns out that at least for now, this claim is more valid than widely believed."