Just Released: Royal LePage One in five homes purchased by Canadian newcomers

Royal LePage – One in five homes purchased by Canadian newcomers

    • 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

    Download Graph (.pdf)

    TORONTO, ON, October 16, 2019 –According to a survey commissioned by Royal LePage,[1] newcomers to Canada contribute significantly to real estate demand. Currently, newcomers represent one in every five home buyers (21%).[2] If the current international migration level is maintained,[3] 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.[4]

    “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 ten 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.[5] 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%).

    Regional Insights 

    ONTARIO 

    Ontario accounts for approximately 46 per cent of all international migration to Canada.[6] 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[7] 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.” 

    QUEBEC 

    Nationally, Quebec follows only Ontario in attracting newcomers to live and work (19%).[8] Currently newcomers also represent 19 per cent of all home buyers in the province[9] and they are projected to purchase 102,000 homes over the next five years at the current rate of international migration. The survey also found that 83 per cent of newcomers in Quebec still lived in their first region of residence.

    “Demand for real estate in the province of Quebec, and the Greater Montreal Area in particular, is healthy as newcomers settle here for our excellent academic institutions, great quality of life and relative affordability,” said Dominic St-Pierre, vice president and general manager, Royal LePage, for the Quebec region. “Quebec has a significant out-migration rate and its population continues to age. In addition to enriching the province’s social fabric, newcomers provide a population boost that supports both a healthy economy and vibrant real estate market.”

    Last July, the Institut de la Statistique du Québec stated in their forecast that the province’s population growth is expected to gradually slow.[10] The population growth from newcomers supports healthy demand for real estate.

    “With the labour shortage, many local businesses are recruiting abroad to fill positions,” says Dave Carter, co-owner and manager of Royal LePage Blanc & Noir in Quebec City. “Université Laval also attracts many international students who have the opportunity to pursue their careers here.”

    In the province, 71 per cent of newcomers rent their first home (the highest rate in the country tied with British Columbia), 10 per cent purchase and 14 per cent live with family or friends at little or no cost when they arrive in Canada.

    Despite real estate demand from the sheer volume of newcomers purchasing in the province, they have the lowest homeownership rate in the country, with only 25 per cent of newcomers living in the province of Quebec owning their home, compared to 61 per cent among the province’s total population.[11] When broken down at the city level, 23 per cent of those living in the Greater Montreal Area own their home compared to 28 per cent in Quebec City. Of those who purchase a home in the province, the average duration prior to purchasing is four years.

    “We are helping more and more newcomers in the process of purchasing property. The region offers an excellent quality of life and the vast majority of newcomers already speak French. The fact that the real estate market in Quebec City is affordable provides them with a better opportunity to achieve homeownership,” said Carter.

    Eighty-three per cent of newcomers in the province state that homeownership is a good financial investment and 67 per cent come to Canada with savings that allow them to purchase property, lower than the national average (75%).

    Provincial respondents are the least likely to consider moving to the United States before moving to Canada (17%). 

    BRITISH COLUMBIA 

    British Columbia is the third most popular Canadian destination for international migration.[12] 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[13] and they are projected to purchase 91,000 homes over the next five years at the current rate of international migration.

    ALBERTA 

    Alberta attracts approximately 8 per cent of Canada’s international migration.[14] Alberta newcomers have a significantly high homeownership rate with 45 per cent owning their home. They are the most likely to believe that homeownership is a good financial investment (90%). Newcomers represent 18 per cent of all home buyers in the province[15] and they are projected to purchase 76,000 homes in the region over the next five years at the current rate of international migration.

    “Alberta is particularly appealing to newcomers from all over the world, and already established Canadians who wish to migrate to the province,” said Corinne Lyall, broker and owner, Royal LePage Benchmark. “Calgary has a truly welcoming attitude. It is a relatively young city so the majority of the population was not born here. There is a lot of support for newcomers, along with a real sense of community and love for the area.”

    Upon arriving in Canada, 19 per cent of Alberta newcomers own their first place of residence, 55 per cent rent, and 13 per cent live with family or friends at little or no cost.

    “Alberta supports entrepreneurs and people who are willing to work hard,” Lyall added. “The provincial government provides tax credits for small business investment and programs to help companies succeed on an international level. The lifestyle offered throughout the province, combined with the affordability of home prices, draws people to our part of Canada.”

    Similar to the rest of Canada, the largest group of respondents is families with children (34%), while 29 per cent come as sole applicants. The percentage of newcomers arriving as sole applicants is significantly higher than the national average (20%). Fifty-two per cent of Alberta respondents (the largest region by percentage) say they have children in their household under 18 years old.

    Of those who become a homeowner, the average duration prior to purchasing a home is three years for newcomers in Alberta. 

    PRAIRIES 

    Similar to Alberta, the Prairies also attract approximately 8 per cent of Canada’s international migration[16] and 41 per cent of newcomers own their home. In the province, 62 per cent of newcomers rent their first home, 20 per cent purchase and 17 per cent live with family or friends at little or no cost when they arrive in Canada.

    “Affordability reigns in this region of Canada,” said Michael Froese, managing partner, Royal LePage Prime Real Estate. “Newcomers come to the Prairies because the region can offer a great lifestyle on an affordable budget. It’s particularly appealing for newcomers who arrive as a family or those looking to start a family.”

    Newcomers represents 41 per cent of all home buyers in the region[17] and they are projected to purchase 71,000 homes over the next five years at the current rate of international migration. Of those who purchase a home, the average duration prior to purchasing is three years.

    Seventy-one per cent of newcomers in the Prairies still live in the region where they first resided. Similar to the national average, most newcomers in the Prairies arrive as a family with children (32%). Eighty-six per cent believe that homeownership is a good financial investment.

    “Newcomers who move to the Prairies put down roots here and quickly feel part of the community,” Froese added. “People stay for people.” 

    ATLANTIC CANADA 

    Atlantic Canada attracts approximately 5 per cent of Canada’s international migration.[18] Newcomers living in Atlantic Canada have a homeownership rate of 44 per cent, 12 percentage points higher than the national average (32%). Following the Prairies, it is the second highest percentage of all regions studied. Newcomers represent 31 per cent of all home buyers in the region[19] and they are projected to purchase 43,000 homes over the next five years.

    Newcomers in Atlantic Canada are most likely to be a family with children (39%), 8 percentage points higher than the national average.

    “Surrounded by water and beautiful landscape, Atlantic Canada is the perfect place to raise a family,” said Rudy Chong, owner and manager, Royal LePage Prince Edward Realty. “Many newcomers are thrilled to discover that they can own a large home at an affordable price. Often newcomers arrive from big, metropolitan cities and are seeking the lifestyle the Maritimes offers.”

    Of newcomers in Atlantic Canada, 81 per cent remain in their first city or region of residence. Eighty-eight per cent of respondents in Atlantic Canada believe that homeownership is a good financial investment.

    In the region, 63 per cent of newcomers rent their first home, 20 per cent purchase and 18 per cent live with family or friends at little or no cost when they arrive in Canada.

    Of newcomers who purchase a home, the average duration prior to buying is two years.

For more regional analysis, visit Royal LePage’s media room to find city-specific releases. The media room also contains royalty-free assets such as images and b-roll that are free for media use.

About Royal LePage                                    

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of more than 18,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.

Contact us today for all your Real Estate needs.  Kathy & Dave – “Strength in Teamwork”.  See our blog for other interesting articles:  www.kathyanddave.ca

If you’re interested in learning more about the current housing market in the Niagara region, we would be happy to have a chat with you and answer any questions you may have. Come in for a visit or give us a call! It would be our pleasure to show you how selling your home in the current market could increase your financial gain.

Just Released: Royal LePage Q3 2019 House Price Survey

Royal LePage CEO urges caution with election promises aimed at stimulating housing demand that lack concrete plans to address supply shortages

  • Housing recovery gains strength with national aggregate price forecast to rise 1.5% during the fourth quarter of 2019 compared to same period in 2018
  • Price gap between condominiums and houses shrinks as median condo price in the City of Toronto surpasses $600,000 mark
  • Montreal East posts highest home price appreciation rate in Canada’s largest urban centres, rising 8.5%
  • Lower prices in Greater Vancouver attract a new wave of home buyers, resulting in a spike in home sale volumes 

TORONTO, October 10, 2019 – According to the Royal LePage House Price Survey[1] released today, the aggregate price of a home in Canada has continued to post steady year-over-year gains during the third quarter of 2019 as the real estate market sustained its recovery from the significant downturn of 2018 and early 2019, following the introduction of the federal mortgage stress test.

“It is encouraging to see our political leaders devote thought and time to housing issues during the federal election,” said Phil Soper, president and CEO, Royal LePage. “With the fastest growing population among advanced economies worldwide, providing adequate shelter for Canada’s rapid pace of household formation presents an economic opportunity and a social challenge.

“Careful stewardship of the real estate industry and its related financial sector is critical for the health of the country’s economy and the personal wealth of Canadian families,” Soper continued. “Well-intentioned election promises aimed at making housing more accessible and affordable to first-time buyers will fall flat if they trigger a surge in demand without a corresponding increase in the supply of homes. For example, lowering monthly mortgage payments by stretching repayment over a longer time period looks great on the surface, yet a surge in new buyers could cause prices to escalate, erasing the enhanced purchasing power.”

The Royal LePage National House Price Composite, compiled from proprietary property data in 63 of the nation’s largest real estate markets, showed that the median price of a home in Canada increased 1.4 per cent year-over-year to $630,335 in the third quarter of 2019. When broken out by housing type, the median price of a two-storey home rose 1.3 per cent year-over-year to $738,346, while the median price of a bungalow remained flat at $521,250. Nationally, condominiums remained the fastest appreciating housing type, with the median price rising 3.4 per cent year-over-year to $457,911. Data analyzed contains both resale and new build transactions, provided by Royal LePage’s sister company, RPS Real Property Solutions.

“Low interest rates and an outstanding employment picture continue to buoy consumer confidence and support our recovering real estate market,” said Soper. “The collateral damage from the trade war between the U.S. and China has been manageable to date. Barring a full-blown American recession, our outlook for Canada’s housing sector is for continued market expansion.”

Looking to the fourth quarter of 2019, Royal LePage forecasts that the aggregate price of a home in Canada will rise 1.5 per cent year-over-year to $632,226, which is a 0.3 per cent increase compared to the third quarter of 2019. The 2019 fourth quarter forecast is dependent on consistent economic conditions and no new housing policy changes.

Looking to regional real estate trends during the third quarter, condominiums, once affordable to most families and single professionals in the City of Toronto, have surpassed the $600,000 mark, rising to $618,391. As the price gap between condominiums and houses shrinks in the region, demand for detached properties has grown. The median price of a two-storey home in the city centre rose 5.5 per cent, signaling that buyer demand has largely absorbed the mortgage stress test hurdle to homeownership. In the fourth quarter, Royal LePage forecasts the aggregate price of a home in the Greater Toronto Areato be relatively flat quarter-over-quarter at $859,301, which is a 3.1 per cent increase over the fourth quarter of 2018.

While we predicted that the pace of home price appreciation in the Greater Montreal Area would slow down in the second half of 2019, the aggregate home price in the region remained strong, increasing 5.9 per cent year-over-year, well above the national rate. Bungalows in Montreal West posted the highest price appreciation across all housing types surveyed in the country, rising 12.2 per cent year-over-year to $447,663 while the aggregate price of home in Montreal East rose 8.5 per cent to $439,499 – the highest aggregate price increase among the largest urban centres nationwide. Significant price growth in Montreal East began to surface since the fourth quarter of 2018 as demand in the city core and lack of supply pushed buyers into the ends of the city. Overall demand in the region stems from buyers watching prices escalate and are looking for affordable properties. Another factor is strong consumer confidence as employment remains healthy and economic fundamentals remain positive. In the fourth quarter, the aggregate price of a home in the Greater Montreal Area is forecast to increase 1.6 per cent quarter-over-quarter to $425,431, which is a 6.0 per cent increase over the fourth quarter of 2018, representing the highest price increase forecast in the country.

The Greater Vancouver real estate market continues to see year-over-year price declines, which has attracted considerable interest from buyers and spurred sales. The aggregate price of home in the region decreased 5.2 per cent year-over-year to $1,194,900. However, the quarterly trend shows that the rate of price decline has slowed and is expected to slow further as buyers see current prices as an opportunity to own property in one of Canada’s most beautiful and prosperous cities. In the third quarter, the aggregate price of a home in Greater Vancouver decreased 0.8 per cent quarter-over-quarter, while the previous two quarters had quarterly decreases of 1.5 per cent (Q2 2019/Q1 2019) and 1.6 per cent (Q1 2019/Q4 2018). In the fourth quarter, the aggregate price of a home in Greater Vancouver is forecast to decrease 0.4 per cent quarter-over-quarter to $1,190,120, which is a 5.5 per cent decrease compared to the fourth quarter of 2018.

Home price appreciation in Ottawa remained at a healthy pace in the third quarter as the aggregate price of a home increased 3.7 per cent year-over-year to $481,948, a result of sustained demand from a growing technology sector. While the median price of a two-storey home and bungalow posted gains of 2.9 per cent and 8.7 per cent, respectively, the median price of a condominium dipped 0.9 per cent. The decline in the median price of a condominium reflects a lack of inventory in listings priced above entry-level. Both inventory and unit sales are expected to increase after the federal election. In the fourth quarter, the aggregate price of a home in Ottawa is forecast to increase 1.1 per cent quarter-over quarter to $487,249, which is a 3.7 per cent increase over the fourth quarter of 2018.

Commodity-driven real estate markets including CalgaryEdmontonReginaSaskatoon, and St. John’s posted year-over-year price declines. While the aggregate price of a home in Calgary decreased 4.3 per cent year-over-year to $464,542 in the third quarter, it rose 1.1 per cent over the previous quarter driven by appreciation in the two-storey detached house and bungalow segments. In the fourth quarter, the aggregate price of a home in Calgary is forecast to be flat at $465,007, which is a 2.4 per cent decrease over the fourth quarter of 2018.

In Atlantic Canada, Halifax’s low inventory and high demand have continued to put upward pressure on home prices. In the third quarter, the aggregate price of a home in the region rose 1.6 per cent year-over-year to $328,690. In the fourth quarter, the aggregate price of a home in Halifax is forecast to increase 3.7 per cent to $318,598 over the same period in 2018.

For more regional analysis, visit Royal LePage’s media room to find city-specific releases. The media room also contains royalty-free assets such as images and b-roll that are free for media use.

About Royal LePage                                    

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of more than 18,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.

Contact us today for all your Real Estate needs.  Kathy & Dave – “Strength in Teamwork”.  See our blog for other interesting articles:  www.kathyanddave.ca

If you’re interested in learning more about the current housing market in the Niagara region, we would be happy to have a chat with you and answer any questions you may have. Come in for a visit or give us a call! It would be our pleasure to show you how selling your home in the current market could increase your financial gain.