Surge of International Students to Canada Puts Focus on Housing

Written by Posted On Tuesday, 23 July 2019 05:00

Canada’s population is growing at its fastest rate in 28 years and is the highest among the G7 countries. It’s not another baby boom – the increase in population is being led by an influx of international students. And they need a place to live.

“For some time, Canada has been a destination of choice for international students for reasons such as the favourable mix of quality and affordability of post-secondary education,” says a report by Sri Thanabalasingam and Yasmine El Baba at TD Economics. They say a growing share of these students is choosing to permanently settle in Canada following graduation, which “could contribute to easing the pressures of an aging population, help address labour shortages, boost sagging productivity and increase diversity in Canada,” say the authors.

“Canada grants a longer work permit to graduates (than the U.S. or U.K. offers), thus providing international students enough time to find a job in their field of interest. By gaining Canadian work experience, international students are then eligible to apply for permanent residency.”

Canada’s population growth rate was 1.4 per cent in 2108. Among G10 nations, growth averaged 0.5 per cent.

The TD report says that during the last three years, the number of international students coming to Canada has surged from about 250,000 to 350,000. They contributed about $21.5 billion to the Canadian economy in 2018.

All of those international students, as well as domestic students who move to a different city to attend college or university, need a place a live. But Benjamin Tal, an economist with CIBC Economics, says students housing isn’t being counted by official figures compiled by Canada Mortgage and Housing Corp. (CMHC). That’s because the official census says that “students who return to live with their parents during the year should be included at their parents’ address, even if they live elsewhere while attending school or working at a summer job.”

Tal says, “excluding these students is problematic. Yes, they are planning to return to their parents’ house, but during the academic year many of them (perhaps the majority) live elsewhere, and therefore represent demand for housing, which is then missing from CMHC figures. Accordingly, from a housing demand perspective, the widely quoted increase in the number of adult kids still living with their parents may be exaggerated.”

Tal says a rough estimate – “and we will not take it to the bank” – is that “we undercount the total stock of housing demand in Canada by 300,000 units. What’s more, given that almost all the undercounting is among young students, and that their number has been rising much faster than the overall population, the relative impact on growth in housing demand is notable – predominantly in cities with major post-secondary schools.”

The TD report says in 2017, Toronto, Montreal and Vancouver hosted more than half of Canada’s international students. The students come from all over the world, with China, India, South Korea, France and Vietnam leading the way.

“Outside of a handful of small institutions, almost no Canadian university campus offers enough on-campus student housing to house all of its full-time students coming from outside the host city,” says a white paper by SVN Rock Advisors in Burlington, Ont.

“Purpose-built rental student housing is a growing market that has seen steadily rising demand over the last 20 years, and a supply that has only just started to rise to meet it.”

The company says real estate investors must understand that renting to students is much different than a traditional rental. For example, most conventional rental buildings lease apartments for a year, but students usually only go to school for eight months of the year. This means they must try to sublet the apartment for the other four months.

Many students also try to partner with other students to save living costs. “In conventional rentals, it means leasing a unit and then subleasing to roommates who share the rent. This practise places a number of burdens on the student and raises uncertainties for the landlord. If one of the roommates moves out, the other tenants have to cover that share of the rent. Purpose-built student housing rents units by the bed, rather than by the door. Students are responsible for their own rents, and all tenants within a unit are covered by the protections and obligations of the lease,” says the SVN Rock Advisors white paper.

But it says the only region addressing the demand for purpose-built student housing is Waterloo, Ont., which has 23,387 beds in off-campus developments, although this is still below the estimated population of the area’s two major universities. Toronto is the next largest market with 4,681 units, followed by London, Ont. and Vancouver.

“Privately operated, purpose-built off-campus student residences are the most attractive type of off-campus housing for students,” says SVN Rock Advisors. “In Canada, however, this market is only just maturing and so not all student housing markets offer private student residences.”

As of January 2019, SVN says an estimated 51,747 purpose-built off-campus student beds were available or being built across Canada.

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Jim Adair

Jim Adair has been writing about Canadian real estate, home building and renovation issues for more than 40 years. He is the former editor of Canada’s leading trade magazine for real estate professionals, as well as several home building, décor and renovation titles. You can contact him at [email protected]

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