Demand stemming from tech sector professionals and a strong influx of immigrants is currently a major driver of housing demand in Toronto and Montreal, according to IPA’s just-released Midyear Canadian Multifamily Investment Forecast Report.
Over the last few years, Toronto has seen an ever-growing number of global tech companies establishing major operations in the city. The first half of this year alone saw 81,600 new jobs added to the local economy, which has benefited from the surging the high-technology sector.
“Many of these jobs are high-paying tech positions as more companies in the industry grow their Canadian workforce,” the IPA study noted. “Employment grew at a rate of 3.4% year over year in June, a substantial rise from the 2.9% pace posted one year earlier.”
The demand has become particularly apparent when looking at Toronto’s exceedingly tight vacancy rate of 1.1%. This has led to the rise of multiple offers and bidding wars, which have pushed Toronto’s average price per rental unit up by 9% annually, up to $277,000.
Apartment rents stood at an average of $1,370 per month as of the end of 2018, which was 4.7% larger over the previous year.
Montreal is experiencing a similar trend, especially because the city plays host to multiple globally-acclaimed universities “along with industry-leading artificial intelligence and entrepreneurial programs.”
The average rent in the market increased by 4.1% year-over-year, to $797 per month. Average prices grew by 6% year-over-year, to $154,400 per unit.
In addition, the city’s immigration policy is paving the way for even more demand among non-locals. This will augment last year’s approximately 28,200 non-permanent residents (mostly students and temporary workers) originating from overseas.
“An estimated 16,000 households will be created this year, partly supported by a simpler immigration system than the U.S. that has lifted foreign entry numbers substantially,” IPA stated.
And this is most likely just the beginning: An RBC Economic Research earlier this year said that the Canadian government is looking to boost its annual immigration targets, from 330,000 in 2019 to 350,000 by 2021.