Hope for housing market
Two recent independent reports cite demographics, interest rates and employment growth as significant factors that will cushion the expected downturn in the Lower Mainland’s housing market next year and through the next decade.
In a report issued on August 28, CIBC senior economist, Benjamin Tal, predicts an increased demand from baby boomers’ children (the 25–34 age group) and immigrants “might limit the degree and duration of the projected correction in housing activity in BC.”
He explains that immigration will provide the most population growth in Canada and BC gets proportionately more immigrants adding that after immigrants pass the three-year mark in Canada, there is a significant jump in their home ownership rate.
Demographic projections suggest there will be fewer Canadians under the age of 25 and between the ages of 45 and 54, but Tal notes in his report that those groups account for a small portion of home buyers. He says the group aged between 25 and 34 — the age group that makes up the vast majority of first-time buyers — will continue to grow.
In an interview after his report was published Tal said, “This demographically driven fear is much ado about nothing. Many of those young people, they’re lucky, they have wealthy parents.”
In its July 2012 Housing Forecast, Altus Group Economic Consulting predicts fewer housing starts and softer prices for most regions in Canada next year, however in BC specifically, the market will continue to benefit from strong employment growth and along with the rest of Canada low interest rates.
For more information and to subscribe to Altus Group’s forecast reports, click here.