Immigration Boosting Canadian Housing Sector -Analysis

A house in Greater Vancouver, Canada. A report by the National Bank of Canada says the effects of immigration on demographics will keep housing prices in Canada from falling (Tony Fox, GFLD)

A new economic analysis credits immigration for keeping Canada’s housing sector growing amid a slowdown in the developed economies.

As reported by the Globe and Mail, a National Bank of Canada (NBC) report on the Canadian housing market finds that the so-called ‘household forming cohort’, which is the segment of the population aged 20-44, is growing much faster in Canada than in most developed countries.

Without the influx of 147,000 new Canadians aged 20-44 through immigration, the demographic would have seen a decline in 2012, according to NBC senior economist and report author, Matthieu Arseneau. The average growth rate of the 20-44 demographic was negative 0.3 percent last year among the rest of the developed economies, compared to the positive 1.1 percent growth rate seen in Canada.

Arseneau cites a high rate of employment among foreign born Canadian citizens, which is lower than only New Zealand and Norway’s, as a pull attracting foreigners to immigrate to Canada.

The report projects the growth in Canada’s 20-44 cohort will decrease after 2013, but will remain positive, and will exceed that of other developed countries. This demographic trend, Arseneau argues, will provide the country’s housing market with a comparative advantage over those in other developed countries, and reduce the likelihood of a crash in Canadian housing prices as predicted by some market watchers.

Canada Has Fastest Population Growth in G8, Driven By Immigration and Led by Prairies

The Prairie provinces, prospering from their abundance of natural resources, led Canada in population growth in the year ending June 30th, 2012. Two thirds of the world's potash reserves are near Saskatoon, pictured above, the largest city in Saskatchewan.

A Statistics Canada report released today estimates that Canada’s population grew by 1.1 percent in the year ending June 30 2012, giving it the fastest population growth among the G8 countries.

In comparison, the second fastest growing population in the G8 was that of the United States, which grew by 0.7 percent over the same period. Japan, with its shrinking population, had the lowest population growth rate, at negative 0.3 percent.

The largest source for Canada’s population growth was immigration, as the country has continued to sustain the highest immigration levels in the world as a percentage of its population.

Among Canadian provinces, Alberta saw the fastest population growth, at 2.5 percent, as the province, which has the highest per capita GDP in Canada, continued to lead the country in inter-provincial and international immigration and natural population growth.

The economy of Alberta has benefited in recent years from a booming oil sector as production in the Athabasca oil sands, which is one of the largest oil deposits in the world, continues to ramp up.

Other Prairie provinces also saw rapid population growth, with Saskatchewan and Manitoba’s populations growing by 2.1 and 1.2 percent respectively.

A recent Fraser Institute study found that Alberta, Saskatchewan and Manitoba have the best labour markets in Canada, with the lowest unemployment rates and fastest employment growth in the country, thanks to strong performance from their resource sectors.