Non-permanent residents have helped drive the housing markets in Ontario and B.C., says CIBC
CIBC finds growing TFW and student demographic could affect housing market, consumer spending
CBC News Posted: Apr 29, 2015 1:12 PM ET Last Updated: Apr 29, 2015 2:22 PM ET
Non-permanent residents have helped drive the housing markets in Ontario and B.C., says CIBC. (Pawel Dwulit/Canadian Press)
Non-permanent residents make up an increasing number of the under-45 generation in Canada, more than doubling to 770,000 in the past decade, according to a CIBC study.
That means they are a substantial demographic force and have an impact on housing activity and consumer spending, particularly in Ontario and British Columbia. In total, there are 450,000 more non-permanent residents in Canada now than there were 10 years ago.
CIBC found almost half these people are temporary foreign workers, or workers on contracts, an increase of 10 percentage points in the past 10 years.
About 38 per cent are students, a five-percentage-point increase, but the number of refugee claimants waiting for word on their status in Canada is making up a smaller percentage of the group, at 12.2 per cent.
“Unlike immigrants, the TFWs don’t have a predictable impact,” said Benjamin Tal, CIBC economist and author of the report.
He said many of people in this cohort of 384,200 non-permanent workers are in middle-income and professional jobs, and have every expectation of gaining status to remain in Canada.
That means they are boosting demand for rental properties and contributing to overall retail spending like other middle-income Canadians. Some are even taking the plunge into the housing market, despite their temporary status.
Because almost 95 per cent of these people are under age 45, they make up an important demographic of young workers, helping counteract the decline in the number of Canadian-born people in that age group.
Large numbers in Ontario, B.C.
The most powerful demographic and economic impact is not in the tight labour markets of Alberta and Saskatchewan, but in British Columbia and Ontario, Tal found.
The number of non-permanent residents tripled in Ontario between 2006 and 2013. If those people hadn’t arrived, the province would have lost 120,000 people in the important cohort that is forming households and powering economies.
In B.C., the number in the 25-44 age group would have been flat if the non-permanent residents total hadn’t doubled.
“It is not a coincidence that those two provinces are also the ones to experience long-lasting strong housing market activity,” Tal said in his analysis.
The implication is that any new federal policies to alter the status of TFWs should take into account their importance as spenders in the Canadian economy.
“The main issue is to take into account the economic impact of such large numbers. The number is big enough to change the trajectory,” Tal said.
He said the 2013 numbers, which he drew from Statistics Canada, may underestimate the number of non-permanent residents in Canada compared to more recent figures from Citizenship and Immigration Canada.
He points to a 14 per cent growth in new permits for TFWs and nine per cent growth in extensions in 2014. There is very little evidence such workers are returning to their home countries, he said.