Canada’s largest bank sees the immigration slump lasting a few years. RBC economists crunched the numbers, and saw a huge decline in the number of new permanent resident arrivals. In addition to the decline in arrivals, they also note a big drop in new applications. Since applications take months to process, the bank is seeing fewer permanent residents for a while – and with that, weaker housing demand.
Permanent Resident Arrivals To Canada Drops Over 67%
The bank notes what we’ve been discussing for a while – a significant decline in the number of new permanent residents. Permanent resident arrivals dropped to 34,000 in Q2, down 67% from the same quarter last year. Economists from the bank noted the decline for just the month of June was down 44%, which is an improvement. The slowdown has the bank forecasting Canada will only receive 70% of the 341,000 new permanent residents targeted. This leaves Canada with significantly less housing demand than originally factored.
Canadian Permanent Residents
The number of permanent residents to arrive in Canada, in thousands.
Source: Government of Canada, Better Dwelling.
Those arriving may also have a limited impact on new housing demand. The bank observed 24,000 new permanent residents in Q2, but only 4,000 arrivals at airports in June. The firm’s economist believes this indicates most arrivals were already in the country. If that’s the case, only a fraction of those approved would create new housing demand.
Immigration Not Likely To Recover Near-Term
The trend will take much longer to recover than people currently expect. Applications for permanent residency were down 80% in Q2. The bank notes part of this is due to closed application centers, but also due to a lack of motivation to move during a pandemic. In addition, economic downturns also tend to slow migration.
Since there are fewer new applications, this means the real impact has barely begun. The bank estimates it takes at least a year to process applications, and up to two – under normal circumstances. The decline in applications seen today, won’t be felt until well into next year. That would be if the pandemic globally disappears today, and provides no more friction. Otherwise, the backlog of applications can delay processing even further.
RBC economists see the immigration trend potentially impacting housing demand. While the immediate barriers impacting new arrivals may be lifted soon. The issue of applications won’t crop up until next year, at the earliest. This will likely come as a second wave of arrival declines. Coincidentally, it will also arrive as the mortgage deferrals cliff kicks off.
Like this post? Like us on Facebook for the next one in your feed.
Canada would turn into America if unemployment was this high, and the population was being flooded with high skilled immigrants. Huge swing to anti-immigration platforms.
Given current economic situation Canada needs to stop immigration for 4-5 years until the economy recovers. Thats all immigration including reunions.
There’s already no immigrants, rents are falling, and prices are rising. “Immigration is driving prices” is just another made of narrative the real estate industry uses, and dumb people think it sounds logical. As if the restraint isn’t how much people can pay.
Lower immigration levels “MAY” impact house prices. So far the Canadian house prices have defied all logic, even a pandemic cannot stop the prises from rising. This will just be another drop in the bucket.
Actually every market is off their peak, and pre-sale absorption is like one in ten units. But by all mean, keep reading the articles about the over ask bids on units that never close because of appraisal.
This is not a problem. We can just broadcast to the world that everyone who moves here gets $2000 per month for free! Inflation schminflation. Wait, why is my food suddenly more expensive?…time to print more money!
I could be mistaken, but I thought CERB ends in September, and EI replaces it. Although everyone that does uber eats, etc. qualifies now, so I’m guessing there’s going to be a pretty big jump in spend there.
Let’s “stimulate” been the mantra for the last 15-years, money is cheap, future generations be damned!
Also factor outflow. A lot of people are in the country, waiting out safety before they return home.
I know someone who just graduated from UofT this year, due to the pandemic and racism she decided to leave Canada and return to China. There are thousands of cases like this.
Yet the government is using tax payer money to prop up subprime housing bubble. Time to investigate the government for using tax payer money to prop up real estate prices which only benefit real estate speculators. If you only have one house and live in it, even if prices fall 50% it would make no difference.