Soaring real estate prices and rents in Canada are creating significant challenges for immigrants, and International students from Asian Countries alike.
Skyrocketing Costs of Real Estate in Canada:
The average national home sale price in Canada surpassed $668,754 in July 2023, with rates ruling even higher in major provinces like Ontario and British Columbia. This puts homeownership out of reach for most immigrants, especially students with limited financial resources.
This has led to financial insecurity, anxiety, and even insecurity to meet even basic necessities.
Rentals skyrocketing near Universities and Colleges:
Rents are also on the rise, making it difficult for students to find affordable accommodation near universities or colleges. This had led to longer commutes, increased stress, and potential displacement to less desirable or less convenient neighbourhoods for both Immigrants and Students.
Displacement and community challenges:
Finding affordable housing, especially in desirable areas, has become challenge for immigrants. Immigrants are now forced to move to less desirable neighbourhoods or even cities, potentially disrupting their social networks and access to cultural and language support services.
The constant struggle to find and afford housing has contributes to significant stress, anxiety, and feelings of insecurity for immigrants. This has started negatively impacting their overall well-being and integration into Canadian society.
Affordability Crisis affects immigrants and International Students, both financially and emotionally, especially from Asian Countries, in Canada
Impact on skilled labour availability in Canada
Canada relies heavily on immigration to fill skilled labour gaps. However, high housing costs along with other cost of living has started dissuading skilled professionals from immigrating, potentially hindering economic growth of Canada.
Social and Political Tensions with natives of Canada:
many Canadians view immigration as a contributing factor to rising housing costs, which is fast developing in discriminatory attitudes and policies.
Financial Strain to students as high rental costs eats into their study budget:
High housing costs can eat into students’ budgets, leaving them with less money for food, transportation, and other essentials. This can lead to financial insecurity, anxiety, and even food insecurity.
High realty costs is not limited to any single province in Canada and rather affecting all provinces in Canada alike
When it comes to unaffordable rental costs in Canada, there’s no single province escaping the squeeze. However, some regions feel the pinch more than others. Here’s a breakdown of the provinces facing particularly harsh rental realities:
British Columbia:
Vancouver consistently tops the charts as Canada’s most expensive rental market, with the average one-bedroom apartment exceeding $2,400 per month.
Even outside Vancouver, affordability woes plague the province. Victoria, Kelowna, and Nanaimo all grapple with skyrocketing rents, making it tough for residents to keep up.
Ontario:
The Greater Toronto Area (GTA) and surrounding regions like Hamilton and Kitchener-Waterloo are notorious for their astronomical rental costs. One-bedroom apartments in Toronto easily surpass $2,000 on average.
Eastward Woes: Even Ottawa, traditionally considered more affordable, has seen significant rent increases in recent years.
Nova Scotia:
Halifax Heat: The provincial capital, Halifax, has experienced a dramatic surge in rental prices, pushing the average one-bedroom apartment rent beyond $1,800.
The affordability crisis in Halifax is spilling over to surrounding areas like Dartmouth and Bedford, making it challenging to find relief outside the city core.
Prince Edward Island:
Charlottetown, the provincial capital, has witnessed a rapid rise in rental costs, with one-bedroom apartments now averaging over $1,600 per month.
The island’s limited housing supply and growing popularity as a tourist destination exacerbate the affordability issue.
These are just some of the provinces grappling with severe rental affordability challenges. It’s important to remember that affordability is relative, and what might be considered unaffordable in one region might be more manageable in another. However, the overall trend of rising rents across Canada is raising concerns about housing accessibility and the growing strain on middle-class and low-income residents.
What factors affect new Immigrants in Canada to own their own houses:
Wage stagnation: – Wage increase has not matched the inflation in real estate prices.
Wages haven’t kept pace with rising housing costs, making it harder for people to afford rent.
Buying a house in Canada as a new immigrant can be exciting, but it can also be daunting.
Build your credit history:
This is crucial for obtaining a mortgage at a favourable interest rate. Open a Canadian bank account and apply for a secured credit card to start building credit.
Get pre-approved for a mortgage:
This will give you an idea of how much you can afford to borrow and put you in a stronger position when making offers.
Save for a down payment:
Aim for at least a 5% down payment, but 20% is ideal to avoid mortgage default insurance.
Do your research:
Understand the different types of mortgages available, compare interest rates from different lenders, and research housing markets in your desired area.
Maintenance and Ownership Costs:
Owning a house involves additional expenses beyond the mortgage, such as property taxes, insurance, repairs, and maintenance. These costs indirectly influence the rental price but aren’t directly reflected in the rental percentage.
Finding the right home- take help from a real estate agent:
A good agent can help you navigate the complexities of the market, find suitable properties within your budget, and negotiate the best deal. Rule of Thumb to decide the fair value of the house is that monthly rent might be around 0.5% to 0.75% of the house’s total value. This means a house costing $200,000 could potentially have a monthly rent of $1,000 to $1,500/-.
Consider your needs and priorities:
Think about your family size, lifestyle, commute, and amenities when choosing a neighbourhood and type of home.
Don’t be afraid to negotiate:
Once you find a home you love, be prepared to negotiate the price and closing costs.
Financing your purchase of a House in Canada
Shop around for the best mortgage rate and don’t just go with the first lender you talk to. Compare rates and terms from different banks and mortgage brokers.
Understand the associated costs to finance the house:
These can include things like lawyer fees, land transfer taxes, and home inspection fees. Be sure to factor these costs into your budget.
Get mortgage default insurance if necessary:
If you can’t afford a 20% down payment, you’ll need to purchase mortgage default insurance. This will protect the lender if you default on your mortgage.
Additional tips for new immigrants:
Connect with other immigrants: They can offer valuable advice and support as you navigate the home buying process.
Learn about government programs that help immigrants buy a home:
There are a number of government programs available to help new immigrants buy a home. For example, the Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 from your RRSP for a down payment on your first home.
Don’t rush into anything:
Buying a house is a big decision, but with careful planning and preparation, you can make it a smooth and successful experience. Remember, owning a home in Canada can be a great way to build wealth, stability, and a sense of belonging in your new community.
Take your time to select good house in Canada, do your research, and make sure you’re comfortable with the decision before signing on the dotted line.
What is Expected from Canadian Government- Solutions and Strategies:
- Building more affordable housing units, particularly near universities and colleges, is crucial to address the supply shortage and ease pressure on rental prices.
- Develop dedicated housing options for international students, potentially through partnerships between educational institutions and government agencies.
- Offer scholarships, and grants specifically targeted at immigrant students struggling with housing costs.
- Implement rent control measures and regulations on foreign investment in housing to stabilize rental markets and prevent further price hikes.