Rental markets suffer as population growth slows from record-breaking levels
Pandemic-induced restrictions at the Canadian border have led to major declines in both permanent and non-permanent residents arriving in the country.
In turn, these sharp declines have caused the country’s population growth rate to fall from the record-breaking levels seen over the past few years. Now, the impact on the country’s rental market is becoming more apparent as the pandemic drags on, especially when it comes to rent prices in major cities.
According to a recently published research brief from RBC Economics, 34,000 new permanent residents arrived in the second quarter of 2020, down 64 percent from the same period a year ago.
During the same period, the number of net non-permanent residents living in the country declined by 24,000, wrote economists Andrew Agopsowicz and Carrie Freestone. They described this decline as a “stark reversal” to the consistent second quarter increases observed over the last five years.
Ontario, Quebec and BC — the country’s most populous provinces — saw the steepest permanent resident declines.
Overall, Canada’s population growth rate was 1.1 percent between July 1st, 2019 and July 1st, 2020, with the first three quarters of that period seeing record levels of immigration before declining precipitously in the second quarter of 2020.
In commentary published earlier this week, Capital Economics’ Stephen Brown wrote that the declining number of new arrivals are impacting apartment rental prices most evidently in Toronto and Vancouver, known as major immigrant hubs.
“[T]he fact these two cities tend to attract a disproportionate share of new arrivals to Canada, helps to explain why the near 10 percent falls in apartment rents in Toronto and Vancouver since March have been higher than elsewhere [in Canada],” wrote Brown.
When will Canada begin to see this decline reverse course? Capital Economics’ Brown and RBC’s Agopsowicz and Freestone did not provide a concrete answer.
Focusing on non-permanent residents, which includes international students attending the country’s universities, the RBC economists said that the number will likely continue to fall for the remainder of 2020 as new study permit applications have been steadily declining for the duration of the pandemic.