Still today, the whole Canada is busy to forecast for the upcoming trends of the Recession and Economy behavior – It’s basically depends on how long these COVID-19 measures are in place? As per my 3rd episode, I discussed few potential lingering effects of COVID – 19 on the Canadian Economy – Debt/Loan backlog, Business Existence and Recovery, and Employment. Today I am going to discuss about the following major issue:
Today I was talking to one of the Real Estate Agent and asked with curiosity, “what will happen to the Housing Market in this Pandemic period?” The reply I received is emotional – “God only knows! Huh!”
It is clear that housing market activity has slowed dramatically, as the number of unemployed Canadians has risen sharply, but empirical data analysis indicates this decline will be temporary and only a very modest fall in prices might result from this crisis.
The sturdy growth of Canada’s population through immigration has been one of the things contributing to rising housing demand, a key sector of the economy. Job losses and heavy debt loads mentioned above may lead to a slowdown, especially outside Canada’s hottest housing markets. In a special report, the Canada Mortgage and Housing Corporation (CMHC) said Wednesday that the COVID-19 pandemic will lead to a “historic recession in 2020,” which will lead to “significant falls in indicators of the housing market.”
The pandemic settled in across the country just as the spring home-buying season was starting, casting a chill on the market as lockdown measures made it difficult to do showings. Sales fell 15 per cent in March before falling even more the next month to their worst April in 36 years.
The CMHC is now forecasting that prices will fall by between nine and 18 per cent from where they were before the pandemic, before recovering a little in the early part of 2021. But they aren’t expected to be fully back to where they were before at least 2022. “The precise timing and speed of the recovery is highly uncertain because the virus’s future path is not yet known,” CMHC’s chief economist Bob Dugan said.
On the other hand, Canada’s national housing agency also says the number of new homes being built and sold will remain below the levels they were at before COVID-19 until 2022 at least, and prices won’t get back to where they were for another two years either.
The ongoing COVID-19 pandemic has impacted Canada’s immigration and mobility programs in a large way. But Canada recognizes the importance of immigration for both the labor market and economic growth. Although Canada has imposed temporary restrictions, such as closing the border to asylum seekers, the federal government recently made changes to allow entry of some asylum seekers into Canada. Restrictions of weeks or months will lead to a backlog of immigration cases and as the economy works through its recovery, governments may face pressure to limit the total flow of immigrants as Canada is still approving applications for permanent residence and holding immigration draws throughout the pandemic.
Canada recently announced a planned increase in immigration for the next three years. Due to Canada’s aging population and low birth rate, immigration is necessary to alleviate the associated economic and fiscal pressures. Canada’s baby boomer population of approximately 9 million people are already reaching retirement age, which makes Canada even more dependent on immigrants to support a healthy workforce and economy. COVID-19’s effect on Canada’s immigration plans for the coming years is not yet known. Immigration numbers could lower naturally due to longer processing times of some programs during COVID-19.
As we know, Immigration is crucial for Canada due to low birth rates. With the current COVID-19 economic crisis, birth rates may drop even further as people struggle with financial uncertainty. Economics professor Ron Kneebone from the University of Calgary points out that countries with low fertility, little immigration, and declining populations struggle to preserve economic growth. Immigration is needed for population growth – now more than ever. Population growth, in turn, fuels labor force growth.
Further, life expectancy in Canada is up 11.5 years since 1960. With a decreasing population and longer life expectancy, Canada will end up in a position with increased demand for elderly support and, without robust immigration programs and numbers, a workforce too small to handle the needs of both the economy and our generous social programs. Historically, as immigration goes up in Canada, so does the strength of our economy. Most immigrants arriving in Canada are of working age and are well educated, thus helping the economy to thrive.
Economists expect that the Canadian economy will rebound fairly quickly once COVID-19 measures are removed. Pre-coronavirus, our economy was growing, and unemployment was at a record low, due in part to many baby boomers retiring. This created jobs for both Canadian-born workers and immigrants and will likely continue following the coronavirus pandemic. Continuing solid and consistent immigration numbers during this time and beyond will likely help the Canadian economy bounce back faster as immigrants fill new jobs and support job creation.
To be continued…
Next Episode: Education & Social Media
Episode -1: The economy during COVID-19 in Canad
Episode -2: Economy during COVID-19 in Canada
Episode -3: Economy during COVID-19 in Canada