Is the Rise in Real Estate Activities Due to Population Growth?

Real estate activities are on the rise across Canada as the country experiences population growth. Real estate expert, Steve Saretsky, shares some stats regarding housing shortage and increased housing sales across multiple cities in Canada in this week’s newsletter. What does this mean for investors and real estate developers?

Latest on Canadian Real Estate Market Trends by Steve Saretsky

Happy Monday Morning!

The Canadian population grew 1.4% year-over-year in July, marking the fastest pace of growth since the 1990s. The rapid growth has been fuelled primarily by immigrants, with the Liberal Government pumping in 313,580 people in the past year, the most on record for a single year. Given the large increase in new immigrants and overall population growth, it shouldn’t be a surprise that the country is mired in a housing shortage.

The latest figures from local real estate associations suggest housing pressures haven’t gone away in many Canadian cities. Sales in the Toronto region jumped 22% year-over-year in September, pushing the benchmark price higher by 5.2%, the highest rate of annual growth since December 2017.

In Greater Vancouver sales activity spiked for the third consecutive month, growing by 46% year-over-year after coming off a historically weak September 2018. Prices still dropped across all segments but there are certainly signs of prices stabilizing.

Montreal area home sales rose 14% in September, with the median price for a detached home rising 6% and the median condo price up 10% from last year.

Meanwhile, in the nation’s capital, Ottawa home sales increased 8% year-over-year with the average resale price for residential properties in September climbing 8.3% to $487,400 according to data published by the Ottawa Real Estate Board. This was something of a surprise because Ottawa’s real estate activity normally slows in the run-up to a federal election. “We haven’t seen that transpire this year,” said board president Dwight Delahunt.  “It suggests consumers are highly confident in our local economy and real estate market.”

Indeed, homebuyers remain confident around a federal election promising to bring more stimulus to support record-high valuations in the housing market, despite a softening economy. The latest GDP reading suggests the economy recorded zero growth in July despite rampant population growth. This pulled Canada’s year-over-year growth down to a 4-month low of 1.3%. However, on the bright side, activity at the offices of real estate agents and brokers was up 4.2% in July, rising for the fifth consecutive month.

Three Things I’m Watching:

1. The Canadian population is growing at 1.4% annually, the fastest rate of growth in more than two decades.

2. The real estate GDP growth is now back to around its average of the current cycle, after deviating from it in the wake of the macroprudential rules introduced in 2018.

3. Despite the uptick in recent sales activity for Greater Vancouver, year to date home sales remain sluggish.