Immigration may help in solving the housing bubble issue in Canada

Canada has started the journey to reaching its quite ambitious immigration goals, planning to welcome more than 1.2 million newcomers during three years.

According to the immigration rules, permanent residents need to have money for their settlement in Canada, so they will not be a financial problem for the government.

Of course, some of these funds may go into future property purchases.

RBC economist Robert Hogue explains how the immigration recovery could affect the national real estate market.

“If we look at the previous 15 months, we’ll see that an immigration decline didn’t weaken home prices or home resale activity,” – Hogue says.

“That’s why it might not necessarily have the opposite effect of raising home prices, at least in the nearest future,” – he noted.

While Hogue doesn’t expect immigration to increase the pressure on real estate prices, it still can serve a purpose for Canada’s housing market.

“We see immigration as a safety net, at least during the next couple of years,” – the economist said.

Hogue explained: “In case there are certain concerns that now we’re in a bubble and it may burst causing a market crash, we believe that immigration recovery will provide some support for the real estate market.”

So is the national housing market in trouble?

“We don’t expect the market to crash or to face a significant price drop, for instance, the way we saw in the U.S. after the 2008-09 financial crisis, so the immigration will be a supportive factor,” – Hogue said.