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Listings shortage will push Canadian home prices higher in 2021: RE/MAX

Against a tumultuous backdrop, the Canadian housing market put on a remarkable display of resilience in 2020.

Now, as we enter the final stretch of this bizarre and challenging year, one of the country’s largest brokerages is forecasting more healthy home price growth and strong buyer demand for 2021.

RE/MAX Canada published its Housing Market Outlook Report on Tuesday, addressing a wide range of real estate topics, from the pandemic-driven suburban home buying surge to the much-better-than-expected performance of the country’s housing market despite 2020’s abundant economic turmoil.

RE/MAX brokers and agents surveyed for the report said a lack of housing supply hitting the market will continue, leading to challenges for homebuyers and putting more upward pressure on property prices.

This upward pressure is expected to result in national home price gains in the four to six percent range for 2021, driven by “move-over” buyers who are relocating from their cities and provinces and “move-up” buyers looking for more space.

“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” said Christopher Alexander, Executive Vice President at RE/MAX Canada.

“This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021,” he added.

There was certainly no shortage of pessimistic takes on the country’s housing market in the early days of the pandemic. With housing markets frozen due to lockdowns and subsequent restrictions, it was difficult to be optimistic as sales plummeted through the spring and job losses piled up.

Yet, according to a survey of Canadians commissioned by RE/MAX for the report, the pandemic directly influenced only six percent of Canadians to sell their homes this year. It’s a far cry from the anticipated market upheaval caused by large numbers of homeowners who, unable to make mortgage payments, would be forced to sell, leading to a tsunami of listings hitting all at once and driving property prices down.

Instead, the survey found that 40 percent of Canadian homeowners realized their current home needed renovations during the pandemic while 29 percent said they decided they needed more space.

As for the outlook for 2021, 52 percent of Canadians were confident that the housing market would “remain steady” and still viewed real estate as a strong investment option.

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Ending Density is not destiny

Back in March and April, there was a belief that big and dense cities were going to pose a serious problem in the fight against COVID-19.

The narrative was that the benefits of urban density suddenly flip to glaring negatives during a pandemic. Elevators are a problem. Public transit is a problem. Busy streets and public spaces are a problem. Instead of density, you want dispersion. There was also some speculation that COVID-19 cases would be somewhat correlated with colder climates.

The data that we are seeing today suggests the opposite. Note the above chart by Axios. On a per capita basis, COVID-19 cases are now the lowest — and below the national average — in large US cities with populations greater than 1 million people. Where cases are the highest, again on a per capita basis, is in rural areas. Non-metro areas less than 10,000 people. The county with the highest rate also isn’t the coldest of places. It’s Childress County, Texas, where the rate is about 1,265.3 cases per 100,000 people.

I have a lot of questions about the most important factors affecting transmission rates. Is mask wearing, for example, more important than average temperatures? What is the impact of socio-economic status? I am seeing maps that, unfortunately, suggest this plays a meaningful role. What is really driving these so-called “hot spots?” But what seems clear to me is that density is not necessarily destiny during this pandemic.

Chart: Axios

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Detached home building surged in Ontario last month amid skyrocketing demand

Home building activity across Ontario picked up in October, driven by significant growth in low-rise home construction.

Housing starts for single-detached homes and semi-detached homes rose 14.2 percent and 29.4 percent, respectively, last month, according to data published by the Canada Mortgage and Housing Corporation (CMHC). Housing starts measure how many homes began construction during a given period and are viewed as a key factor in determining market health.

TD Economist Rishi Sondhi said that the strong performance suggests that home builders are “reacting to the outperformance in detached home sales observed during the pandemic.”

Detached home prices rose over 20 percent in 14 Toronto region suburbs in October on the back of high buyer demand for less expensive properties with more space outside of city cores. October was the fourth straight month that saw sales exceeding 10,000 total transactions in the region, primarily driven by single-family homes.

Home building across the province has remained resilient through 2020, with housing starts from January to October up over 15 percent compared to the same 10-month period last year.

“Since the restart in May it has been business as usual for the construction sector,” wrote Central 1 Credit Union Economist Edgard Navarrete.

“The only thing impeding the development of new housing is the shortage of skilled labour,” he added.

Looking ahead, Navarrete said that construction activity could decline through the final two months of the year as tighter virus control restrictions are implemented and homebuyer confidence slides as a result of increased economic uncertainty.

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Canadian households sitting on $90 billion surplus cash: CIBC

A surge in Canadians’ disposable incomes and a decline in their spending habits has resulted in approximately $170 billion of surplus of cash, $90 billion of which is tied up in households, according to a CIBC report.

The COVID-19 pandemic was the impetus for reduced consumer spending, but with the addition of the government’s pandemic emergency programs, which bolstered incomes, the amount of money Canadians saved skyrocketed. The report noted that the excess cash—the other $80 billion is held by businesses—which is about 4% of consumer spending, is a record.

“That spike in disposable incomes coincided with a notable decline in spending, which resulted in the savings rate surging from 3.6% to 28.2% as of June,” read the report. “Since then, government support has become increasingly more tailored to those who need it the most, while the re-openings have seen a nascent recovery in consumer spending. Using US data for the third quarter as a guidepost, the Canadian savings rate likely fell to 13% in Q3—still miles above the 3.6% level seen prior to the pandemic. With the second wave of infection upon us, that rate is likely to remain elevated during the winter.”

The report’s findings are all the more bizarre considering the economy is still reeling from pandemic-induced business shutdowns this past spring, and yet Canadians have never been more flush. But upon closer examination, low-income households accounted for the overwhelming majority of job losses in Canada, and their consumption habits didn’t much diminish as they continued buying essentials. However, the majority of the surplus money belongs to mid- and high-income households, which curtailed their non-essential outlays.

“We do not have current data on spending by level of income for Canadians, but utilizing high-frequency US data, we learn that spending amongst high-income households is currently 10% below its January level—notably weaker than the 3% drop seen amongst low-income households,” said the report. “With the happy days of summer over, it is reasonable to assume that mid- and high-income households will, in fact, reduce consumption of nonessentials again.”

The report also predicted that consumption growth will decelerate while incomes will stay elevated because of both the Canada Recovery Benefit program and Employment Insurance, which will cost $17.9 billion and $13.5 billion, respectively, through the next two years, and because of new job creation.

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Interesting Market 2020

Strangely the Greater Toronto Real Estate Market has been spotty but active and there are options and opportunities as there are in any market.

The number of listings has increased and we have had a flip-flop as the 905 activity surges over that in 416.

“The trend here is that the pandemic has made the age-old desire to live in close proximity to the Central Business District quite irrelevant (for the time being.)”

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Toronto named tech hub of Canada and a hotspot for talent in North America

Though we’re no longer set to be the home of one of the most technologically advanced neighbourhoods in the world, Toronto is still proving itself to be a huge force in the tech sector, and a hot spot for those in the industry.

The city’s scene has now surpassed that of even San Francisco as far as growth, and is still expanding rapidly despite the pandemic, as indicated by new numbers on our tech worker pool.

According to new rankings from CBRE, which scores U.S. and Canadian cities on their tech talent, Toronto tops the list in Canada for 2020 with a ranking of 87.6, adding a staggering 36.5 per cent more workers in that industry betweeen 2014 and 2019, making for about 250,000 innovative minds — 8.8 per cent of the city’s total workforce.

Even compared to major U.S. hubs, Toronto gained a significant edge as far as new graduates in the field, far outpacing all other Canadian cities with a ranking of 64.34 and coming fourth overall as far as tech talent between the two countries, just after the San Fran Bay Area, Washington and Seattle.

 

With billions being invested into new startups in the city each year, it’s no surprise that people in the biz are flocking here, especially as tech companies are far less affected by the health crisis than other types of businesses.

Some — like Shopify, which has a burgeoning Toronto presence — have even benefitted from the uptick in things like online shopping and social media use.

“Through COVID-19, tech companies have generally fared well. Early on, ecommerce and social platforms experienced a boom as shelter-in-place measures went into effect, forcing everyone to rely on the tech around them to work and live,” the new report reads.

“Success also extended to more specialized players in the realms of cybersecurity, IT infrastructure, gaming, and work-from-home enablers.”

As people continue to work from home and rely on online options amid lockdowns, it’s safe to assume that Toronto’s tech sector will keep on flourishing as the city remains one of the top contenders in the industry.

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New lockdowns would hurt sales, but not home prices: Capital Economics

The biggest risk to Canada’s housing market in the near-term is new lockdowns in big cities that have seen COVID-19 infections surge in recent weeks.

According to an economist with Capital Economics, restrictions that may be rolled out in the coming days would put a dent in the robust sales activity recorded since summer, but would leave home prices mostly unaffected.

“The key near-term risk to the housing market is the prospect of “circuit-breaker” lockdowns in the major cities,” wrote Stephen Brown in a research note published today.

“New restrictions for Toronto [are] due to be announced later on Friday and, while the rumours so far suggest these will remain targeted to certain high-risk activities, we would not be surprised if this is the last step before all non-essential businesses are closed,” he added.

So far, Canada’s housing market has “shrugged off” worsening COVID-19 outbreaks. Brown said that a small monthly decline in home sales recorded in October could be tied back to lower inventory of homes for sale rather than pandemic fears. At the national level, the supply of unsold homes dropped to a record low of two and a half months, meaning it would take two and a half months for all homes currently listed on the market to sell at the current rate of sales.

With new restrictions aligning with the late year period and holiday season, when home sales typically slow down anyway, Brown writes that these measures “wouldn’t do much” to home prices.

The economist acknowledged that downtown condos are a weak spot for the market, but from a national perspective, they are too small to significantly shift home prices at the country-wide level.

Far more important to Brown is the potential impact of an effective vaccine on the housing market in 2021. Pfizer and Moderna have both reported the efficacy of their vaccines is at or near 95 percent. With Canada having already ordered substantial amounts of both, Brown asks if the distribution of those vaccines could reverse the rising home price trends we’ve seen this year.

It may seem like an unusual question considering the promise of a return to normalcy that the widespread distribution of these vaccines hold. But Brown writes that the pandemic was “an unexpected boon for the housing market” and COVID-19-driven policy moves by Canada’s central bank have caused mortgage rates to drop to rock bottom levels.

If mortgage rates were to begin to rise again on the back of an improving economic picture as the pandemic recedes, this could dissuade some potential buyers from entering the market.

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Home prices record highest October increase in 22 years: Teranet

A widely watched Canadian home price index just posted its highest gain seen for the month of October in 22 years.

The Teranet-National Bank Home Price Index rose 1.3 percent last month over September and 8.1 percent from the previous year. Ottawa-Gatineau, Hamilton and Montreal were the local markets that saw both the strongest monthly and annual price gains.

Victoria, Vancouver and Halifax also saw price increases healthily above one percent in October. Meantime, Toronto, Quebec City, Edmonton and Winnipeg all saw increases at one percent or lower.

The Teranet-National Bank index is known to lag behind other widely used home price tracking tools, including the monthly average home sale prices published by the Canadian Real Estate Association and local boards.

This is because the index is compiled using a repeat sales methodology that works by tracking the price change between the two most recent sales of the same property. The index uses prices entered into public land registries in the Canadian markets it tracks. These often are slower to respond to market changes because sale price data is not added to land registries as quickly as it’s entered into the MLS systems used by real estate boards.

National Bank Senior Economist Marc Pinsonneault said that a surge in the number of sales entered into the index was a sign the Canadian housing market is continuing to firm up after the pandemic caused the market to stall through the spring.

Because of the lagging nature of the index, the worst of the pandemic’s market impact was more clearly captured in the summer, rather than in the spring data.

Pinsonneault noted that sales entered into the index in October were up 48 percent over the same time last year.

“This development echoes the revival of home sales reported by the Canadian Real Estate Association beginning in July, recovering ground lost in the severe slowdowns induced by COVID-19 in previous months,” he said.

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North York Surpasses Toronto Proper as Priciest City in Canada to Rent 1-Bed Apt

It appears Toronto has been dethroned as the most expensive city in the country for average monthly rents for a one-bedroom after North York surpassed Canada’s largest city in October.

On Friday, Rentals.ca and Bullpen Research & Consulting released their latest National Rent Report, which revealed that year-over-year, the average rent for all property types — which includes single-family housing, townhouses, rental apartments, condominium apartments, and basement apartments — listed on Rentals.ca in the country is down by 8.1% in October — but an uptick was recorded in the average rent for all Canadian properties at .7% month-over-month to $1,782, after four months of almost no change.

“We continue to see an increase in listings nationally, which tells us that supply is outpacing demand. This market imbalance suggests soft rental market conditions will continue for the rest of the year,” said Matt Danison, CEO of Rentals.ca.

What’s more, the latest data has shown that a number of Canada’s largest real estate markets are now experiencing declining rental rates, and in turn, secondary markets are seeing their average rents increase, as more tenants work from home and continue to look for larger, but less expensive units in smaller communities.

In October, average Toronto rents for all property types continued to nosedive with one-bedroom units falling 17% year-over-year and declining every month since January, while two-bedroom units down 14% annually and declining month-by-month since July.

According to the report, North York overtook Toronto for the highest average monthly rent for a one-bedroom home after increasing 7% month-over-month to an average of $1,945.

However, Toronto still finished second on the list for average monthly rent for a one-bedroom home in October at $1,922 and for average monthly rent for a two-bedroom at $2,531.

The October report also looked at how average rents for select municipalities — and former municipalities — have changed over the past year. In October of last year, Oakville, Vancouver, North York, Toronto and Mississauga all saw rent levels increase by 5% to 14% annually for all property types. In October 2020, all of those areas experienced declines of 5% to 17%.

According to the report, this data backs up the “Urban Exodus” theory in Ontario — which is when people move to rural areas from large towns and cities — with average rents declining by 8% in North York, 15% in Etobicoke, 17% in Toronto, and 20% in East York, while cities such as Kitchener, Hamilton, and London are still seeing double-digit rent growth during the pandemic, with annual increases of 14%, 15%, and 17% respectively.

What’s more, in October of last year, it cost more than $200 more to lease the average property in Toronto than in North York, while during the same time this year, rent in North York is higher than Toronto by approximately $25 per month on average.

When looking at the monthly changes for condo and rental apartments, North York has the most expensive one-bedroom units at $1,953 per month, topping both Toronto and Vancouver, as a number of new purpose-built apartments are starting pre-leasing programs, pulling the average up.

However, it is important to note that comparing North York and Toronto can be difficult because the make-up of listings has shifted dramatically. According to the report, both areas have seen declines in listings for the more expensive single-family segment, but North York has seen a decline in condo listings year over year, while listings for condo apartments on Rentals.ca in Toronto has increased by 45% annually.

“The rising rents in several smaller municipalities, as well as the significant increase in web traffic on Rentals.ca in Ontario, suggests many prospective tenants are widening their search area when looking for a rental property,” said Ben Myers, president of Bullpen Research & Consulting.

 

 

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10 new skyscrapers about to transform the Toronto skyline

Toronto is a city of soon-to-be skyscrapers. According to the 2020 North American Crane Index, we have the highest number of active tower cranes out of every other city in the continent, with 120 in the downtown core alone. And in a matter of years, those cranes will be replaced by some of the tallest condos in the country.

Here are some new skyscrapers about to transform the Toronto skyline.

SkyTower, 95 storeys
Hariri Pontarini’s monster condo (pictured above) is slated for completion in 2024. It’s one of three towers making up the Pinnacle project at One Yonge, and will be the tallest building in Toronto, after the CN Tower. If you’ve got a budget as lofty as this development, you’ll be able to afford one of their $800,000 units.

Mirvish+Gehry, 91 and 81 storeys
The Princess of Wales Theatre will soon get two garganguan companions, courtesy of two new mixed-use, high-ceilinged towers in the Entertainment District. Billowy “canopies” will protrude out of these tower podiums and over Duncan Street.

1200 Bay Street , 87 storeys
Swiss-based architectural firm Herzog & de Meuron and Canadian group Quadrangle have been appointed by developers Kroonenberg Groep and ProWinko to transform the corner of Bay and Bloor into this mix-used tower with floor-to-ceiling operable windows and a sky lounge.

The One, 85 storeys
If you’ve passed by Bloor and Yonge lately, you’ve undoubtedly caught sight of the scifi-looking construction site of Mizrahi Developments’ The One. Construction was delayed for several months but above-ground work has finally resumed. It will be Canada’s first supertall skyscraper when it’s done in 2022.

YSL Residences, 85 storeys
The southeast corner of Yonge and Gerrard has seen massive changes over the years, in large part to make way for two towers, dubbed Yonge Street Living (YSL). Both skyscrapers will be connected by a sky-bridge.

372 Yonge, 74 storeys
The Aura Tower is still the tallest residential building in Canada right now at 79 storeys, but only slightly shorter will be this new project from Dialog, which will sit directly across the street. It will also hold a new venue called Club Bluenote, named after the iconic rhythm and blues club which used to exist on the property in the 1960s.

50 Bloor Street West, 70 storeys
Rising up from Yorkville’s Holt Renfrew will be this condo with office space and retail on the bottoms floors. There will be 600 residential units included in the build. A trio of KingSett towers ranging from 50 to 69 storeys located around the corner are also on the way.

200 Queens Quay West, 71 and 41 storeys
The waterfront will soon be even less visible from uptown thanks to this pair of towers from Lifetime Developments. Originally slated to be affordable housing, this parking lot will instead be a mix of condos with some affordable housing sprinkled in.

Concord Canada House, 69 and 59 storeys
Concord Adex’s headquarters will soon be replaced by this mixed-used condo project. Both towers will jut out of a 10-storey podium and contain more than 1,300 new condo units.

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Massive master-planned community with 6,600 new homes proposed for Scarborough’s Birchmount Park

A 25-acre expanse of properties located between St. Clair Avenue East, Kennedy Road and the Scarborough GO Train station could make way for a master-planned community.

In late October, an Official Plan Amendment (OPA), draft plan of subdivision and rezoning application was submitted to city planners to construct a mixed-use community with 6,619 residential units at 3585 Saint Clair Avenue East. The site would span multiple lots, and incorporate new retail, park and residential uses. The architect, Giannone Petricone Associates, is also behind other master-planned projects in the Greater Toronto Area, including 250 The East Mall Condos and Agincourt Mall Redevelopment.

The development lands are located on the south side of St. Clair Avenue East within an area known as the Scarborough Junction Triangle, according to the planning rationale by Bousfields Inc. Consisting of 12 industrial and commercial-type properties, the site is split into two parcels, bordered by Kennedy Road to the west, St. Clair Avenue East to the north and the Metrolinx GO Transit rail corridor to the southeast.

This is not the first time that development applications have been proposed for this area. In 1998, an OPA was filed for a mixed-residential and commercial project on an 19.7-acre portion of the site. Rezoning applications were later filed and then appealed in 2006. The application went through revisions from 2006 to 2012, and a Settlement Approval was granted in April 2019, explains the planning rationale.

The Scarborough Junction Master Plan seeks to create three large sites within the triangle that contain new streets, buildings and park space. The recent development application focuses on Site A, with Sites B and C used as a reference but not formally included in the application.

Redeveloping the subject Site A would create a 201,715-square-foot public park with 10 development blocks containing buildings ranging from 12 to 48 storeys in height.

 

Seventeen high-rise buildings with mid-rise base structures are proposed for Site A. Of the 6,619 proposed residential suites, the breakdown consists of 379 studio, 4,509 one-bedroom, 1,058 two-bedroom and 673 three-bedroom units. According to the project’s data sheet, the residential units would include both condominium and rental uses.

Approximately 317,621 square feet of total residential amenity space would be provided for indoor and outdoor use. A total of 3,666 parking spaces are proposed for Site A, located in a series of underground garages. The application also includes 7,336 bicycle parking spaces for long- and short-term use.

In the southern part of Site A in Block J, a 201,715-square-foot public park would be constructed adjacent to the railway corridor as a central focal point of the master-planned community. Landscaped pathways, event spaces, sport courts, lawn space and a children’s playground with play structures are being considered for the park area.

Landscaping features, seating areas and patio spaces are also proposed in various sections of Site A, such as the 7,588-square-foot Station Plaza and 36,769-square-foot Retail Square. According to architectural drawings, space for a grocery store, daycare, retail and community rooms are proposed.

In the neighbourhood, Merge Condos continues sales while registration is underway at Nahid on Kennedy.

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Condo prices just rose over 10% in 6 Toronto suburbs

Detached homes have been rightfully stealing the headlines with remarkable sales volume and sky-high price growth, but there are still some areas in the Toronto region that are seeing better than average condo price increases.

While they, for the most part, don’t scale the heights of their detached home counterparts, condos in six Toronto suburbs saw average prices rise over 10 percent in October, according to the latest data from the Toronto Regional Real Estate Board (TRREB).

The Livabl team looked at the average sale prices for condo apartments sold last month in the 30 cities and towns outside of the City of Toronto that TRREB tracks. Of the areas that recorded 10 or more sales during that time, six saw price increases over 10 percent compared to the previous year.

Oshawa and nearby Clarington saw condo prices rise nearly 17 percent and 15 percent, respectively. These were also the least expensive condo markets that saw significant transaction volume during that time. The average price of an Oshawa condo rose to $323,563 while Clarington saw its average price increase to $417,053.

Rounding out the six, Whitby, Markham, Brampton and Pickering all saw condo price increases above 10 percent.

Despite recording the highest condo sales volume outside of Toronto-proper, Mississauga’s average condo price only rose 2.3 percent from the previous year to $536,435. Sales volume in a single year, of course, does not tell the whole story. As the TRREB figures show, Mississauga’s condo sales volume in October actually fell slightly compared to a year ago.

Conversely, condo sales all climbed over October 2019 in the suburban markets that saw 10 percent-plus price increases.

Because of its outsized population, TRREB divides Toronto into three sub-regions — West, Central and East. Toronto Central saw the highest transaction volume, but the average price dropped just shy of 1 percent to $740,578.

Toronto West and East fared better, with average prices rising 8 percent and 5.7 percent, respectively. Due to their lower sales volumes, however, they had less of an impact on Toronto-proper’s overall average condo price, which rose only 0.8 percent from the previous year to $668,161.

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Toronto’s housing market broke another sales record in October

Just like clockwork, another month ended with Toronto’s housing market breaking a record for home sales, with October logging 10,563 transactions across the region.

The October total was up more than 25 percent over the previous year and represents the fourth consecutive record-breaking month for Toronto home sales. It was also the fourth straight month that sales exceeded the 10,000 transaction mark, according to the Toronto Regional Real Estate Board data published today (TRREB).

The pandemic-induced spring freeze that saw sales plummet may feel like a distant memory, but COVID-19 is still clearly impacting market activity and buyer preferences. Single-family homes continued to fly off the shelf in October, while activity in the condo segment remained muted by comparison.

TRREB said that sales growth in the detached segment “far outstripped” the rise in new listings. Meantime, the condo segment saw new listings double compared to the previous year while recording a modest 2.2 percent increase in sales.

“Competition between buyers of single-family homes, and particularly detached houses, remained strong last month and continued to support double-digit annual rates of price growth in many GTA neighborhoods,” said TRREB President Lisa Patel.

“In contrast, condo buyers have benefitted from much more choice compared to last year. Pre-COVID polling had already pointed to an increase in investor selling in 2020. The pandemic only added to this trend with a stall in economic growth and a halt to tourism impacting cashflows for many investors,” Patel continued.

The board’s benchmark price rose nearly 11 percent over October 2019, while the average selling price of a Toronto region home increased 13.7 percent to $968,318. Like sales activity, price growth diverged when observing the detached and condo market segments. The average Toronto region detached home price rose 14.8 percent to $1,204,844 as the average condo price recorded an annual increase under 1 percent to $622,122.

October’s record-breaking sales volume ensured year-to-date home sales for 2020 remained above 2019’s total for the same period.

“Year-to-date home sales through October were above last year’s level. The economic recovery in some sectors coupled with low borrowing costs has kept home purchases top-of-mind for many GTA residents,” said TRREB Chief Market Analyst Jason Mercer.

“With this being said, we have not accounted for all of the pent-up demand that resulted from the spring downturn. Expect record or near-record home sales for the remainder of 2020,” he added.

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Government’s aggressive new immigration targets will be long-term boost for housing market

The federal government’s new immigration targets aimed at making up for this year’s newcomer shortfall will provide support to local housing markets across the country, especially in major urban centres.

On October 30th, Canada’s government revealed its three-year plan to welcome 1.2 million immigrants to the country between 2021 and 2023. If the targets are met, the immigration boost will compensate for 2020’s drastically reduced numbers that came as a result of application and travel constraints caused by the COVID-19 pandemic.

The new immigration targets, which represent approximately one percent of Canada’s population, would bring an additional 50,000 immigrants per year on top of the previously established targets.

Whether renting or buying, the Toronto Regional Real Estate Board’s (TRREB) Chief Market Analyst Jason Mercer explained that the Greater Toronto Area’s housing market benefits from new immigrants, where cultural and labour diversity attracts newcomers worldwide.

“Growth in the housing market is predicated on population growth, and from Canada’s perspective and certainly drilling down into the GTA, immigration is a key driver of population growth,” Mercer told Livabl. “The GTA, I would argue, is Canada’s single greatest beneficiary of that immigration.”

While only 60 percent of 2020’s 341,000 newcomer target is expected to be met, CIBC Capital Markets’ Deputy Chief Economist Benjamin Tal explained that there’s a few offsetting factors at play — a significant portion of new immigrants are already in the country, the number of returning citizens to Canada is increasing, and the phenomenon of ‘brain drain’ has been reduced.

“There are many forces that are compensating for the fact that new immigrants [are down], but clearly it is a factor that is mostly impacting the rental market at this point because most of them are renting,” said Tal.

Canada’s rental markets, particularly in large cities, have seen rental prices slashed and more supply hitting the market, mostly due to far fewer international students and immigrants arriving this year amidst the global pandemic. However, Mercer said that a boost in immigration over the next three years could absorb rental inventory quickly, tightening the market back up and increasing average rents again.

Only 18 percent of newcomers, on average, purchase a condo, according to a 2019 market study commissioned by Royal LePage. However, Mercer explains that condo markets could also experience a higher rate of inventory absorption from immigrants with new condo supply coming online.

“It stands to reason that if you’re moving from rental into homeownership, for a lot of newcomers as well, the condominium market may be the first thought,” said Mercer.

On average, a newcomer purchases real estate three years after moving to Canada. Tal suggests that today’s purchasing newcomers are not necessarily impacted by the virus. Instead, any delays to immigrants buying real estate will be felt three years from now instead of next year, but a lot can still change in that time.

“The same goes for two years ago, or even a year ago. The impact will be felt, if you wish, three years from now on average for when people start buying,” said Tal. “But by then, we will see some sort of compensation from that coming from the increase [in immigration] in the coming few years.”

Tal points to suburbs outside of big city markets as hotspots for newcomer homebuying activity. He says that more immigrants have been looking to suburban communities and rural areas for housing, where there is greater affordability. However, Tal explains that the shift in buyer preferences that has ignited so many suburban housing markets is not a long-term sustainable trend.

“I think in the short-term it will lead to more [buying in] suburban markets, but I think we should not exaggerate this trend,” said Tal. “I think that two or three years from now, when we are on the other side of this crisis, I think that people will go back to what we’ve seen before.”

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10 one-bedroom condos in Toronto that cost more than $1 million

The events of 2020 have shaken up Toronto’s real estate market something fierce, driving rent prices down by record amounts as new condo listings flood the market. But some things never change, it would seem — like the ridiculously high price people will pay for one-bedroom shoeboxes in the sky.

Here are some one-bedroom condos that are currently on the market for at least $1 million, if you’d rather live in 700-square-feet of glass and concrete near the SkyDome than a four-bedroom house in Guelph.

$1,075,000 in Liberty Village
Hear me about before you rage-click that “x” over the thought of a seven-figure one bedroom in LibVille: This 1,034-square-foot loft in the Toy Factory building (as pictured above) boasts everything from 12 foot ceilings and custom closets to a full Scavolini kitchen. A den with built-in Murphy bed pretty much makes it a two-bedroom anyway.

$1,014,900 at Bathurst and Lake Shore
This one bed, one bath on the 42nd floor of the newly-completed Lakeshore residential tower (pictured above) has lake views and sits atop an historic (and frankly very cool) new grocery store. It’s quite petite, however, for the price tag: Only 700-799 square feet.

$1,074,900 at King and Sumach
Okay, here’s a place that actually looks like a million bucks. It may not be large enough for a maximalist couple to comfortably co-exist, but the design, decor, appliances and fixtures are all pure luxury. If impressing people or living among beauty are priorities, look no further.

$1,049,000 in the heart of Yorkville
Now this is more along the lines of something you might pay a milli for, at least in terms of location and space — just steps from Bloor on Cumberland with 1,149 square feet to play with. Plus, look at those bay windows.

$1,049,000 in St. Lawrence Market
A little blah and a lot dated for seven figures, this nearly 1400-square-foot unit in a boutique, nine storey building, located within one of Toronto’s most-coveted hoods does have some great things going for it — like a large legit sunroom with a park view

$1,089,000 in Baby Point
This unit within an “elegant boutique-style building” on Old Mill road can boast more privacy than most other condos in Toronto, with just two units per floor and lots of space: 1,200 square feet indoors plus a 420-square-foot terrace overlooking the Humber River. Still… seven figures for that kitchen? I don’t know.

$1,050,000 in Willowdale
Don’t let the bedroom count on this nearly two level, 1600-square-foot unit off of Yonge Street between Sheppard and Finch fool you: It contains two ultra-cool full-sized offices and is probably one of the more unique pads you’ll see on this list. If a see-through kitchen half-wall excites you, regard.

$1,149,800 near Ryerson
First, some context: The Merchandise Lofts are one of the coolest old hard-loft style condo buildings in the downtown core, and units don’t come up for sale here very often. This 1,255 square foot loft is spacious and bright with two baths and very owner has access to a private basketball court and sick, event-worthy rooftop patio.

$1,090,000 at King East and Sherbourne
Another St. Lawrence Market gem, but modernly-designed in a boutique, “pet-friendly, sun-drenched” building just steps to the Harbourfront. With 1,242 square feet of indoor space and 650-square foot vista terrace facing southwest, this two-level could well be worth seven figures despite having only one bedroom.

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Record number of immigrants Canada-bound in 2021

The federal government intends to settle 1.2 million new immigrants over the next three years in a bid to catalyze economic recovery, and if there’s one sector of the economy that will benefit, it’s real estate.

The COVID-19 pandemic has stifled Immigration, Refugees and Citizenship Canada’s (IRCC) ability to accept and process applications, resulting in a shortfall that’s left segments of Toronto’s once-searing condo market reeling. However, with 60% of these new immigrants touted as belonging to the “economic class,” which includes skilled workers, investors and entrepreneurs, the country’s largest condo market should see an immediate surge in activity.

“To compensate for the shortfall and ensure Canada has the workers it needs to fill crucial labour market gaps and remain competitive on the world stage, the 2021 to 2023 levels plan aims to continue welcoming immigrants at a rate of about 1% of the population of Canada, including 401,000 permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023,” said an IRCC statement. “The previous plan set targets of 351,000 in 2021 and 361,000 in 2022.”

A third of Canadian business owners are immigrants, the statement added.

Davelle Morrison, a broker with Bosley Real Estate, noted that activity in Toronto’s rental market has been hampered by the dearth of newcomers to the city, although she says domestic investors have done their part to buoy the condo market.

“The real estate condo rental market is down quite a bit, as is the resale condo market, and I’d attribute those things to there being no immigration and no travel, which has affected Airbnb and other short-term rental operators. The lack of travel has depressed the rental and resale condo markets,” said Morrison.

“The other thing that’s interesting is, despite not having immigration, a lot of preconstruction condo projects in downtown Toronto have still sold incredibly well, even though they’re only appealing to domestic investors and not foreign investors. They have still fared quite well, even without immigrants.”

Canada welcomed 321,120 new immigrants to the country in 2019—a 116-year high that’s slated to be broken in 2021. Investors capable of carrying condos a little longer will doubtless benefit from the marked rise in demand that should cause market rents to surge.

“If the government’s plan is to allow more immigrants into the country over the next few years, then I’d say that’s great for both the condo rental and resale markets,” said Morrison.

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High Demand for Housing in GTA Will Continue Beyond COVID-19: TRREB

he temperatures may have cooled down, but the Greater Toronto Area (GTA) real estate market continues to heat up, with home sales up over 25% compared to October 2019, marking the fourth month in a row of year-over-year growth, according to the latest data from the Toronto Regional Real Estate Board (TRREB).

According to TRREB’s October housing market report, resale activity in the GTA is showing no signs of slowing down, after having another record-setting month, during which, a total of 10,563 sales were made — a 25.1% jump from the 8,445 sales recorded in the previous October.

The record-level sales were paired with record listings, with 17,802 recorded across the region compared to 13,053 in October of last year. However, despite the overall growth in listings, TRREB said the number of listings “diverged” in some markets, such as the detached home segment, where the pace of annual sales growth greatly outpaced listings. On the other hand, the condominium segment experienced over double the listings seen in October 2019, while sales only increased by 2.2% in the same period.

“Competition between buyers of single-family homes, and particularly detached houses, remained strong last month and continued to support double-digit annual rates of price growth in many GTA neighbourhoods,” said TRREB President Lisa Patel.

“In contrast, condo buyers have benefitted from much more choice compared to last year. Pre-COVID polling had already pointed to an increase in investor selling in 2020. The pandemic only added to this trend with a stall in economic growth and a halt to tourism impacting cashflows for many investors.”

Home prices have been steadily inflating over the past several months, and last month was no different. The average selling price for all combined home types rose 13.7% year-over-year, up to $968,318 from $851,877 in October 2019.

“Year-to-date home sales through October were above last year’s level. The economic recovery in some sectors coupled with low borrowing costs has kept home purchases top-of-mind for many GTA residents. With this being said, we have not accounted for all of the pent-up demand that resulted from the spring downturn. Expect record or near-record home sales for the remainder of 2020,” reads a statement from Jason Mercer, TRREB’s Chief Market Analyst.

Looking ahead, TRREB is remaining positive, with CEO John DiMichele stating that “beyond COVID-19, it is clear that the high demand for housing will continue.”

“The federal government has set immigration targets above 400,000 people for each of the next three years. The GTA will undoubtedly continue to benefit from this population growth. All of these people will need a place to live, whether in the ownership or rental markets.”

In October, the feds announced they are increasing the country’s immigration target between 2021 to 2023 to make up for this year’s pandemic-induced shortfall.

Canada’s Immigration Minister, Marco Mendicino, said the country will welcome more than 1.2 million new immigrants over the next three years, with up to 401,000 new permanent residents in 2021, 411,000 in 2022, and 421,000 in 2023 — an increase of 50,000 each year compared with the previous targets. The previous plan had set targets of 351,000 in 2021 and 361,000 in 2022.

Zain Jafrey, a real estate agent with Coldwell Banker, agreed with DiMichele and said the upcoming increase in immigration matched with low housing inventory and low-interest rates will continue to push prices post COVID. “An increase in population throughout the GTA will continue to increase demand for properties as people will require a place to live and will very well push prices in both the rental and ownership markets. The current pent-up demand will become greater due to the increased competition for limited properties.”

During the COVID-19 pandemic, Canada closed its borders to the majority of immigration hoping to ease the spread of the virus. “Once lifted, this new influx of immigrants and the pent-up immigration being held off by COVID-19 will pick up where strong demand — due to lowered interest rates — taper off,” said Broker Matthew Adam Cracower, who specializes in Yorkville real estate.

“The resiliency of the Toronto and GTA market proved itself during the pandemic and this shows how strong the bounce-back will be once COVID-19 is eliminated.”

Shaun Denis, CEO and broker for Umber Realty, believes that in addition to immigration, there are still a number of factors supporting the housing market in recent months — including low-interest rates, pent-up demand, government support. “As we project a strong positive net migration in the coming years, we expect overall demand will continue to rise into 2021. It is important to note that the lingering effects of COVID-19 will cause disproportionate demand between property classes in the city,” added Denis.

Dorian Rodrigues of PSR Brokerage also believes the current demand will continue into the new year, but partially because “there are many people who are still trying to plan their living situation based on their work scenario.”

“Many buyers have been trying to move from condo life to a house and or move out of the city for more outdoor space. The interest rates also have been low for a number of years now and obviously having them stay low will provide more opportunities to buyers moving up in the market, which we have been seeing a lot.”

While these brokers all echo similar sentiments, some economists have a different point of view.

Benjamin Tal, deputy chief economist at CIBC, recently said he believes “the housing market will slow down,” and subsequently, the economy, too, despite the current overall confidence in the Canadian housing market.

“Even the governor of the Bank of Canada is telling us, listen, don’t expect any growth basically over the next six months. The party’s over. You can’t have a o% increase in the economy with the housing market continuing to boom,” said Tal.

Tal also added that another factor influencing his forecast is that the damage to the labour market will be “much more significant in terms of the impact of the economy and the impact on the economy.” “Normally you would see more higher-wage jobs disappearing or at least you would have less job security there. And that’s very, very important,” explained Tal. “So, I believe that this optimism is not actually going to last for too long.”

Tal said that if you ask any real estate developer or investor in the condo space, they’ll tell you the market isn’t actually that “hot.” As such, Tal says all the focus is now on the low-rise segment of the market where there is no supply.

“The demand is there because of the nature of the crisis and this means that we soon will reach, I believe, a price resistance, even in this segment of the market and it will start softening.”

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Buying or selling a cottage? Be aware of the tax implications

Canadians are out in droves this fall in pursuit of a vacation home or cottage as the country hunkers down for a long winter amid the COVID-19 pandemic.

However, both buyers and sellers need to keep tax implications in mind as the rules change when multiple properties are involved, experts say.

Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth Management, says that a couple is generally allowed one principal residence for tax purposes. When someone with multiple homes – including a vacation home – goes to sell, most people are eager to claim any tax exemptions they can, right away, to save money.

But deciding whether to pay taxes on the capital gains of your home sale is more complicated than it appears, Golombek says.

In 2016, tax rules changed with regard to what is known as the principal residence exemption. The exemption can save sellers money by offering a tax-exempt capital gain on the sale of property designated as someone’s “principal residence.”

This exemption is “the biggest thing to keep in mind when you have a second property,” says Mariska Loeppky, IG Wealth Management’s director of tax and estate planning.

The seller must first decide whether they expect the sale of their cottage or their city home to yield a bigger gain. The more money you gain on a home sale, the better off you are claiming it a tax exemption.

“But that’s not enough,” says Golombek. “Because you also have to look at the number of years after that you’re expected to hold the other property, and its potential for future appreciation. Because if you now choose to use the exemption on the sale of your vacation property, it’s not available for all the years that you owned both properties.”

A vacation home can often qualify for the exemption – as long as it meets certain conditions, such as being inhabited by the owners at least a little each year, and not being regularly rented out as an income property. But unlike decades past, Canada Revenue Agency no longer takes for granted that – if no tax is paid on the capital gain – the tax saving provision is being used.

Now, sellers must be diligent to report it.

“What’s new (as of 2016) is the requirement to actually tell the government that you’re claiming exemption,” says Golombek. “They’re really cracking down on people who are selling residences – if they qualify for the exemption, making sure that you tell them that you’re actually using it.”

Many people with two homes may be encountering the change for the first time when they file 2020 taxes.

Sales of properties in the Lakelands region of Ontario grew more than 40 per cent from a year ago in September, setting a new monthly record led by waterfront properties. A record number of properties were also listed for sale in the region that includes Parry Sound, Muskoka, Haliburton and Orillia. In Kawartha Lakes, sales also hit a record in September (although listings declined), while in British Columbia, the Okanagan Mainline Real Estate Board saw September residential sales rise 78 per cent from last year.

Plus, Loeppky says, a recent renovation boom could also impact the tax situation when it comes to selling a vacation home. An online survey of 2,500 Canadian adults by Rates.ca in early September indicated that more than 16 per cent of respondents were planning or had done a renovation during the COVID-19 pandemic.

When the home goes up for sale, there are also tax implications, says Loeppky. That means homeowners should be keeping receipts for the sale and major renovations on both properties, whether they expect to claim it for a tax exemption or not.

For example, Loeppky says, you may have purchased a house, always expecting that it would be your principal residence for tax purposes. A few years later, you purchase a cottage, which shoots up in value in a hot market.

You’ll likely want to switch gears and try to use the principal residence exemption to ease the tax bill when you sell the cottage. But to do so, she says, you need to show which home makes the bigger gain on paper – so you must keep track of what you paid for the cottage and all the receipts from adding that sunroom years ago.

“It fluctuates with market conditions and over time … You never know what the future holds. Right? And that’s ultimately what it comes down to,” she says.

“In your mind, it’s completely tax free. But then something happens and you end up claiming it for the other property.”

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Investors rush to get out of pre-built Toronto condo deals

Real estate investors are increasingly trying to get out of closing on their newly built condos in the Toronto region, as rents plummet and banks toughen borrowing qualifications for rental properties.

Selling the right to buy the new condo, also known as assignment sales, has soared during the past few months of the coronavirus pandemic, according to realtors.

It is a sign of weakness in the condo market beset by a glut of new units, declining rents and a dwindling number of renters.

“We are seeing a massive wave of assignments of people who don’t want to close in this market,” said Simeon Papailias, senior partner with REC Canada, which brokers hundreds of preconstruction sales every year.

Since the pandemic started early this year, the rental vacancy rate in the Greater Toronto Area has reached its highest level in more than a decade and the average rental price is 9-per-cent lower than the previous year, according to industry research group Urbanation Inc.

Demand for rentals has declined, with border restrictions slowing immigration, tourism and the influx of foreign students. At the same time, the number of available rental units has spiked. A record 23,000 new condos units will be completed in the Toronto region this year, and another 22,434 are due next year, according to Urbanation. It estimates that 50 per cent were bought as rental units.

Condo resales and their average selling price have increased over the previous year. As well, preconstruction sales on condo projects are still robust. But the number of new condo listings and new rental-unit listings are rapidly increasing. If that persists, realtors predict selling prices will start to decline.

As well, many Airbnb operators turned their properties into long-term rentals or are trying to sell them because tourism disappeared. In addition, many condo tenants gave up their places when they lost work or because they found space outside of the city.

Now, real estate investors who are due to close on their new condos worry that they won’t be able to cover their mortgage payments with rent.

“Guys who are closing in the short term are absolutely shook and affected by the pandemic and what it has done to the rental market. That is what is pushing them to assign,” said Mr. Papailias, who estimates that assignments now account for between 20 per cent and 25 per cent of his preconstruction sales. This compared with a range of 10 per cent to 15 per cent before the pandemic.

Unlike condo resales, which is tracked by local boards, there is no database for condo assignments and realtors are typically not allowed to list them. Over all, assignments account for a small fraction of the residential property market.

Assignment sales are only allowed when the condo building is almost completed, and the sale must be approved by the condo developer. The original buyer would have made a down payment for the purchase and sales agreement on the preconstruction condo before it was built about three or four years ago. For condos due to close this year, the original purchase was made around 2016 or 2017, when the economy was strong and demand for downtown city living was high.

With COVID-19 cases rising and some pandemic restrictions back in place, people are losing income and the economic recovery is uncertain. Banks don’t want investors defaulting on their mortgage payments and are trying to ensure that investors have cash and employment income to draw upon if a tenant stops paying rent. Since the pandemic began, lenders have become stricter with their qualifications, including in some cases requiring bigger down payments and not accepting down payments that were borrowed.

“The financing has gotten a lot more difficult,” said Matt Elkind, senior broker with Connect Realty, an expert in preconstruction sales. “The banks’ appetite to lend to investors is down significantly. An individual, six months ago, would have qualified without problem. They’re not now,” he said.

Mr. Elkind said one of his clients did not qualify for a bank mortgage because she received federal aid when her business lost revenue from the pandemic. Some banks are asking prospective borrowers for a 35-per-cent down payment to qualify for the mortgage, whereas in the past, 20 per cent would suffice.

Lenders are also recognizing less of the rental income as part of the borrower’s total income. For example, before the pandemic, a lender would count 80 per cent of the prospective rental income as part of the borrower’s total income. Now, the same lender will only recognize 50 per cent of that income, according to real estate experts.

“For people whose only income is rental, it is hard to qualify,” said Bernadette Laxamana, mortgage broker and president of Karista Mortgage in B.C.

Banks typically have the cheapest mortgages, with interest rates at record lows. (The popular five-year fixed rate is below 2 per cent.) If buyers don’t qualify at a bank, they are forced to seek alternative lenders, which typically charge higher interest rates.

“They are having to look at options where the money is much more expensive. That is where people are having problems,” Mr. Elkind said.

Because the prices of condos have increased since 2016, investors are able to sell their contracts at a higher price, according to realtors, though they said it was not an ideal time to sell, especially as housing demand is expected to soar with Ottawa boosting immigration targets for the next three years.

“Life changes, your situation changes and you have the option to sell. Is this the best time to sell it? No it is not,” said Hunny Gawri, managing partner of My Investment Brokers, which works on all types of preconstruction projects.

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Federal government plans to bring in more than 1.2M immigrants in next 3 years

The Liberal government plans to bring in more than 1.2 million immigrants over the next three years, despite hurdles created by the global pandemic.

Immigration Minister Marco Mendicino unveiled what he called an “ambitious” three-year immigration plan today that set targets for bringing skilled workers, family members and refugees into Canada.

Canada aims to bring 401,000 new permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023.

The numbers — which represent an increase of about 50,000 for each year — aim to compensate for the shortfall this year due to the pandemic and represent about one per cent of Canada’s population.

Last year’s plan promised to bring in more than one million immigrants over a three-year period, but the COVID-19 crisis and the resulting travel restrictions have slowed down the process. Mendicino said the government remains committed to welcoming newcomers as a means to keep Canada’s economy afloat.

At a news conference in Ottawa today, Mendicino said immigrants drive the population and economic growth that pays for vital programs such as health care.

“Put simply, we need more workers, and immigration is the way to get there,” he said.

WATCH: Immigration Minister Marco Mendicino on immigration targets:

 

Mendicino said he’s confident the government can meet the targets despite the global health crisis, by working around travel restrictions while adhering to safety measures such as mandatory quarantines.

He said the government will aim to attract workers to fill labour gaps in regions facing sector shortages.

“With nearly 60 per cent of all new admissions in the economic class, our plan will continue to focus on Canada’s economic growth,” he said.

The breakdown of next year’s plan includes:

  • 232,000 immigrants in the economic class.
  • 103,500 in the family class.
  • 59,500 refugees and protected persons.
  • 5,500 on humanitarian and compassionate grounds.

Traditionally, Ottawa’s goal in immigration policy has been to attract top talent in a competitive global market while reuniting families and offering refuge to people displaced by disaster, conflict and persecution.

In its last three-year plan, the federal government sought to bring in 341,000 immigrants this year, 351,000 next year and another 361,000 in 2022.

The government did not offer a precise figure on how many immigrants have arrived in Canada so far this year, but says it’s on track to meet half of its 341,000 target by year’s end.

Conservative immigration critic Raquel Dancho called the numbers “pure fantasy” and said the government has no plan to bring in large numbers of immigrants safely despite border restrictions and embassy and office closures around the world.

“There’s just no way that’s going to happen. And I was really hoping to hear an actual plan of how those issues were going to be resolved today. And there was not barely any mention of it at all,” she said.

She said rapid testing for COVID-19 would be a critical step in helping bring people in during the pandemic, but the government has failed to make the necessary progress.

She said the Trudeau government must offer a concrete plan for bringing people safely into the country during a pandemic and for integrating them into Canadian society.

“The number can be whatever it’s going to be, but unless they bring forward a plan for how they’re going to change course and get better at processing immigration applications, it’s really all for nothing.”

NDP MP Jenny Kwan said the government must take steps to accelerate processing after the pandemic slowed the process and created a growing backlog of applications.

“With over half a year of applications whose processing came to a complete stop, there will be no shortage of requests to be processed next year,” she said, adding that the immigration department must have a significant boost in resources to deal with the backlog.

“Without these investments, applicants are to expect significant increases in processing times for years to come, which were already long before the pandemic.”

She said Canada also should give permanent residence status to people who want it and are already in the country, such as temporary foreign workers and international students with job offers.

“Canada can, in fact, take a true humanitarian approach by regularizing all those immigrants and refugees and undocumented people,” she said.

Focus on labour gaps, says C of C
Leah Nord, senior director of workforce strategies and inclusive growth for the Canadian Chamber of Commerce, said the government must focus squarely on matching economic migrants to worker shortages in various sectors and regions of the country.

Despite changes in the labour market and a major spike in the unemployment rate since the onset of the pandemic, gaps in the market remain, Nord said — and immigration will continue to play a large role in filling persistent labour shortages.

“We’re in this rather strange situation where we do have higher unemployment rates than we’ve seen for a number of years. Before the crisis there were record low unemployment rates. Now, they’re tipping towards the other end,” she said.

“But we still have a situation where there are still job vacancies and jobs that need to be filled across the country. Immigration can play an important role in diversity and economic growth, but also in filling labour market gaps, for sure.”

The government’s Advisory Council on Economic Growth recommended that Canada boost its annual immigration levels to 450,000 by 2021 to stimulate the economy and tackle the twin labour market problems of an aging population and a low birth rate.

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