Royal LePage president and CEO says policy ‘triple hit’ could be holding back a normal recovery
A sharp downturn in Canadian housing market activity over the past three years has been driven by a variety of factors – among them, drastic cuts to the number of permanent residents and temporary foreign workers entering the country.
Typically a prime demographic for the purchase and rental markets, new Canadians and temporary workers are suddenly nowhere near as prominent in the real estate sector as in previous years, while cities with high shares of investor-owned condos like Toronto and Vancouver are feeling the pinch from lower rental demand.
That immigration slowdown followed a decision by the Trudeau government to ban non-resident foreign buyers from purchasing property in Canada, another big move that weighed heavily against demand from outside the country.
Shrinking population raises new questions for policymakers
Some housing market watchers don’t see any chance of an imminent reversal of the government’s current approach to immigration.
But Phil Soper (pictured top), president and chief executive officer of real estate giant Royal LePage, told Canadian Mortgage Professional he sees those dramatic changes as one of the main reasons behind a “triple hit” for small housing investors – and isn’t ruling out a recalibration of the government’s immigration policy in the coming years.
“[Investors] got hit three times: first by skyrocketing prices during the pandemic boom, secondly by high interest rates, and thirdly by [governments] sending their customers to other parts of the world,” he said. “It’s been hard on that sector of the condominium market. And that has nothing to do with users – it’s the small investor, which is a big part of the market in cities like Toronto and Vancouver.”
Brokers, lenders and other mortgage professionals have a keen interest in the role immigration will play in eventually helping that market turn the corner.
And while Soper believes some rebound will come organically as young buyers seep into the condominium market, he sees the biggest decisions resting within federal politics, particularly with Canada heading into an era of aging demographics and potentially chronic labour shortages.
“The big part will be when we react to the fact that the population shrank last year,” he said. “And of course, policymakers don’t want that – because we’re at peak baby boomer retirement, and baby boomers are paying fewer and fewer taxes and expecting more and more services from governments. And our birth rates are low. So we need to ease up immigration [restrictions] again.”
Could the federal government budge on immigration targets?
The Carney government has given no indication yet that it intends to adjust its current stance on immigration levels, or that overturning the ban on non-resident foreign buyers could be in the cards.
But Soper said without a steady inflow of newcomers, challenges facing the national labour market will become starker – and even as prospects for the housing market improve, a key source of demand will remain absent when it’s needed most.
That points to potential changes in the near future. “I think that’s exactly what we’ll see in 2027 – immigration and temporary foreign workers [increasing],” he said.
For now, that remains to be seen. In November, Immigration, Refugees and Citizenship Canada (IRCC) released its 2026-28 levels plan, significantly reducing new temporary resident arrivals (by 45%) and capping permanent immigration at a maximum of 380,000 a year.
When it comes to the ban on non-resident buyers, True North Mortgage founder and chief executive officer Dan Eisner told CMP last month that he could see it being used as a bargaining chip in upcoming Canada-US-Mexico Agreement (CUSMA) negotiations – but doesn’t expect any changes to move the market substantially.
“People are looking at Canada and saying, ‘Is this a good place to get into the housing market?’” he said. “Over the last few years, I don’t know if the answer to that would be ‘yes.’
“So even if it was reversed, I don’t think that would cause the housing market to pick up substantially. They’re going to look at, ‘Why buy now? Why not buy in six months? Why not buy in a year?’”
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