Greater inbound immigrant volume over the next few years would lead to scarcer supply that in turn would stimulate demand for a higher number of downsized units in Canada’s hottest markets, according to a recent report.
A 2017 outlook by the PwC consultancy cautioned that the average size of a Canadian home—currently almost 2,100 square feet—would shrink as a response to the ongoing real estate affordability crisis, especially in Vancouver and Toronto.
“With increased immigration on the horizon, those arriving in Canada may not have the same size expectations, creating demand for smaller units,” according to PwC’s “Emerging Trends in Canadian Real Estate” report, as quoted by the Financial Post
PwC added that a contributing factor to the trend towards smaller homes is the persistence of regulatory constraints often bemoaned by developers.
“Many believe that provincial government land use policies — like greenbelt legislation in Ontario and British Columbia — together with increasing time requirements to get local approvals are factors holding back the supply of available land for development.”
PwC Canada leader of real estate tax Chris Potter stated that this scarcity will leave incoming immigrants little choice in terms of dwellings.
“We are seeing this come to bear (with situations) like more than one family occupying homes,” PwC Canada leader of real estate tax Chris Potter elaborated. “You see people coming from areas of the world as new immigrants to Canada and finding their ways to (Greater Toronto Area).”
“For the most part you have the millennials that are going into condos and they may not have the same household formation in them, but a lot of the discussion we are having with developers is the trend (that) longer term families will be living in condominiums,” PwC Canada leader of Canadian real estate Frank Magliocco agreed.
“That’s why what you are seeing is some are developing bigger condos that are maybe two bedrooms that were not developed in the past.”