- Canadian newcomers projected to make 680,000 home purchases over next five years
- 82% of newcomers choose to stay in their first city of residence
- 75% of newcomers arrive with savings to help purchase a home
- 75% of newcomers do not consider moving to the United States prior to arriving in Canada. Number one reason cited is newcomers feel more welcomed as immigrants
ACCORDING to a survey commissioned by Royal LePage, newcomers to Canada contribute significantly to real estate demand. Currently, newcomers represent one in every five home buyers (21%). If the current international migration level is maintained, Canadian newcomers are expected to purchase 680,000 homes over the next five years. In 2018, international migration accounted for 80.5 per cent of Canada’s population growth according to Statistics Canada.
“In addition to supporting Canada’s economic growth, newcomers to Canada are vital to the health of our national real estate market,” said Phil Soper, President and CEO, Royal LePage. “The combined demand for affordable housing among younger Canadians and new Canadians can be met through housing policies that encourage smart and sustainable development, with a focus on protecting and developing green spaces in our urban centres. Canada’s economy and labour markets are expanding and it is crucial that housing supply keeps pace.”
For this study, Royal LePage has defined newcomers as those who have moved to Canada within the last 10 years. Respondents include immigrants, students, refugees and those who are in Canada to work. Nationally, the average duration of time respondents spent in Canada is four years.
Newcomers are likely to be a family with children (31%), a student (25%) or a sole applicant (20%). Eighty-six per cent see real estate as a good investment and 75 per cent arrive with savings to help purchase a property. The study showed the average duration of time before newcomers purchase a home is three years after arriving in Canada.
“It is not surprising that newcomers see a home in Canada as a good investment. Having lived abroad myself, I have seen first-hand the challenges of relocating a family to a new world. It takes courage and commitment. Newcomers are doing more than investing in Canadian real estate, they are investing in their family’s future,” said Soper.
Despite the desire to purchase a home, the homeownership rate of newcomers is only 32 per cent. The overall homeownership rate for all Canadians is 68 per cent. Of those who purchase a home, 51 per cent of newcomers buy a detached house, 18 per cent buy a condominium, 15 per cent buy a townhouse and 13 per cent buy a semi-detached house.
Nationally, 82 per cent of respondents remain in the region of their first residence. For those who relocate to a new region, a better job is cited as the most popular reason for moving (41%), followed by lifestyle (13%), and housing affordability allowing the respondent to purchase a home (12%).
Upon arriving in Canada, 64 per cent of respondents rent their first home and 15 per cent purchase. Many newcomers choose to first live with family or friends at little or no cost (18%).
The most popular reason among respondents for moving to Canada is that newcomers see the country as a good place to live and work (54%). Most newcomers do not consider moving to the United States (75%) and the most popular response as to why they chose Canada over the United States was that they feel more welcomed as an immigrant (31%), followed by the belief that Canada is a safer place to live (26%).
British Columbia is the third most popular Canadian destination for international migration. The homeownership rate of newcomers residing in Greater Vancouver is 32 per cent, similar to both the provincial and national average (32%).
“Greater Vancouver is one of the most desirable places in the world to live and we attract newcomers who are optimistic about what the city has to offer in terms of both lifestyle and employment,” said Randy Ryalls, general manager, Royal LePage Sterling Realty.
In the province, 72 per cent of newcomers rent their first home and 9 per cent purchase, while 13 per cent live with family or friends at little or no cost when they arrive in Canada.
“Newcomers are contributing to demand across housing types. Families are searching for houses in family-friendly communities while those coming as individuals are drawn to condos which provide a lower maintenance lifestyle in convenient locations at a more affordable price point,” said Ryalls.
The percentage of respondents who arrive in British Columbia as part of a family with children is 32 per cent. The second most popular response is student (28%), followed by sole applicant (20%), and couples with no children (14%).
Consumer confidence in the province’s real estate market is healthy as 85 per cent of respondents in British Columbia believe that homeownership is a good financial investment.
Eighty-six per cent of newcomers in British Columbia remain in their first city or region of residence. Currently, newcomers represent 15 per cent of all home buyers in the province and they are projected to purchase 91,000 homes over the next five years at the current rate of international migration.
Ontario accounts for approximately 46 per cent of all international migration to Canada. The homeownership rate of newcomers residing in the Greater Toronto Area and Ottawa are both 32 per cent. However, the provincial homeownership rate of newcomers is lower at 29 per cent, 3 percentage points lower than the national average (32%). The survey found that 84 per cent of newcomers in Ontario remain in their first city or region of residence. Currently newcomers in Ontario represent 21 per cent of all home buyers in the province and they are projected to purchase 286,000 homes over the next five years at the current rate of migration.
“Ontario, and more specifically the Greater Toronto Area, has greatly benefited from international migration to Canada,” said Chris Slightham, president, Royal LePage Signature Realty. “Neighbourhoods across the greater region are blossoming with the continued influx of newcomers who are looking for good schools and job opportunities in thriving communities. While some newcomers are attracted to downtown living, there are still many affordable housing options for newcomers in vibrant communities outside of the downtown core.”
Newcomers to the province believe that homeownership is a good financial investment (88%) and 82 per cent arrive with savings to help purchase a home. The demand for detached homes in the province is driven by the number of newcomers who arrive as a family with children (32%). Of those who purchase a home, the average duration prior to purchasing is three years.
“Ottawa is a very attractive destination for newcomers to Canada. Similar to Canada’s other urban centres, the city offers best-in-class healthcare, great schools and safe, friendly communities but with real estate prices roughly half of the cost of Toronto and a third the cost of Vancouver,” said Jason Ralph, managing partner, Royal LePage Team Realty in Ottawa. “The demand from both newcomers and first-time home buyers has put considerable upward price pressure on inventory between $300,000 and $500,000.”
In the province, 60 per cent of newcomers rent their first home, 16 per cent purchase, and 20 per cent live with family or friends at little or no cost when they arrive in Canada.
“The Greater Toronto Area population is growing as both newcomers and Canadians from outside of the region move to the city to live and work,” said Slightham. “This demand is creating upward pressure on our real estate market. We expect this momentum to continue as the GTA remains a desired world class destination.”