Limiting Immigrants
The last issue we will talk about on why rental prices are declining is immigration.
In 2024 the federal government due to political pressure changed the number of immigrants they were allowing to enter the country annually moving forward. In recent years the federal government has increased targets with most of these new immigrants being students.
When new people are entering the country they also need basic needs including housing. This is another factor that assisted in the increase in housing costs due to the increase in population. With the reduction in immigration numbers this decreased the number of people looking for places to rent particularly in the fully furnished market. The new immigrants coming from other locations, especially students, often look for furnished properties until they can secure employment and status in their new country. Combined with the restrictions on short term rentals the lesser number of students entering the market has had an effect on the furnished rental properties.
When the furnished properties are not able to rent to the short term or student market they move their products to the regular rental market increasing supply of product being offered for rent or they elect to sell their properties. Both of these factors create greater supply in the rental and sales markets compared to the current demand.
Many schools across the country have seen reductions in new foreign students which means areas near schools now have increased properties for rent creating downward pressure on rental prices in those markets. The lack of immigration and foreign students is just another factor pushing down the rental prices in BC.
Canada has always and will in the future have immigration in the country, it is just reducing the numbers back to amounts that allow the economy to absorb them effectively into society and is going back to a need based immigration system that was used effectively for many years. The reduction in the immigration will have an impact on the economy in many ways, not just in the rental housing market.
When will the reduction in rental prices slow or stop? This is a question no one can answer clearly. In the lower mainland of BC there are lots of developments still under construction and nearing completion. With each of these buildings completing they are adding more rental properties to the market. We are hearing many developers who were planning other projects have elected to delay future developments due to the current economic future. Developers are laying people off due to slow downs in developments. We anticipate the current developments will take two to three years to be completed. After the majority of these developments are completed we will see low numbers of new housing starts which at that time will have an effect on increasing the housing sales and rental market prices. When the sales market begins to increase in sales again then the rental rate decline will begin to settle. We anticipate we are going to see declining rental rates for another two or three years.
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