Working-age population drives price growth—National Bank

by Ephraim Vecina06 Apr 2016
While a host of factors such as foreign capital and the phenomenon of “shadow flipping” have been blamed for the seemingly inexorable price growth in Canadian real estate, a banking official said that the working-age population is also driving much of the demand in the country’s urban centres.
 
In a research note released last week, National Bank chief economist Stefane Marion stated that nationwide job growth stood at 0.9 per cent in 2015, with the greatest gains seen in Vancouver (4.4 per cent) and Toronto (5.5 per cent).
 
Marion said that the abundance of skilled young professionals in these cities, widely acknowledged as Canada’s most active housing markets, is not a coincidence.
 
“Strangely enough, the alarmists fail to mention that the working age population is growing 70 per cent faster than the national average in Vancouver and Toronto on the back of strong inflows of highly educated immigrants who can more easily integrate [into] the job market,” Marion wrote in the note, as quoted by BNN.
 
“The underlying force for housing demand is household formation. If your population aged 20 to 44 is growing, you have it. If it’s not, home price inflation is not sustainable,” he added.
 
The upward spiral of housing prices does not appear to be stopping any time soon. Figures from the Real Estate Board of Greater Vancouver revealed that baseline costs of residential properties in the city rose by 22 per cent in February compared to the same time last year. Meanwhile, Toronto real estate associations said that prices in their locality shot up by 15 per cent in the same period.

COMMENTS

  • by A B.C. Realtor 4/6/2016 1:17:11 PM

    Finally an educated and informed analysis of the main driving force in any Real Estate market - working age population - not fictitious corrupt Realtors.

  • by a YVR realtor 4/12/2016 2:01:50 PM

    ..absolutely true. The "shadow flipping" antics that the media loves to get hold of and run with are an infinitesimally small % of all transactions, and something that negatively taints all realtors. And what everyone is loathe to state openly is that it's predominantly going on with "certain" ethnic groups who have brought their ways of doing business to this country. I was recounted a story last week of a prospective commercial tenant in "a certain ethnic area" of Vancouver being asked for a "lease-up fee" on top of his first-and-last month's deposit. In the residential rental market asking for "key money" is illegal. Unfortunately the commercial market is not covered by landlord/tenant legislation in BC. I am not only offended as a realtor but offended as a Canadian that these kinds of shady tactics are now routinely carried out here. It's anathema to the thousands of us who do business ethically and with the interests of our clients fully at the forefront of our practices. But no one will clamp down on the groups that are predominantly doing this. Am I a racist? Not one bit. I embrace all peoples and have good friends in almost every ethnic group. I just like to see decent honest business carried out and those that don't do it called out...

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