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episode # 127

Vancouver Real Estate Prices Halt Inter-Provincial Migration with Jock Finlayson

In the second half of 2017, a surprising development occurred – the net inflow of people moving to British Columbia from other provinces decreased dramatically. Jock Finlayson, Chief Policy Officer at the Business Council of British Columbia, suspects that this trend will continue and possibly worsen with B.C. receiving fewer interprovincial migrants than pundits and policy-makers have suggested. Jock sits down with Adam and Matt to discuss his recent findings & highlight the immediate and long-term impact on our province.

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Episode Summary


 

About Jock:

Jock is the Executive Vice President and Chief Policy Officer at the Business Council of BC. He runs the Policy and Research team at the council. The BCBC is a business association representing about 260 of the larger companies in BC’s marketplace. They do a fair bit of research and publications, with a focus on the business and investment environments in the province and what can be done to improve them over time.

On his article in Business in Vancouver, Housing costs put brakes on migration to BC from other provinces:

Jock and his colleague, Ken Peacock, do a monthly economic analysis column for Business in Vancouver. In June, they looked at trends in interprovincial migration (moving within Canada) from a BC perspective (as opposed to international migration, which refers to foreigners moving into Canada and Canadians who emigrate). They saw a sharp decline in the number of people moving to BC from other parts of Canada, along with an increase in the number of British Columbians moving outside the province. This is quite different from where things were two or three years ago—at one point, we were gaining 20,000 people per year (more in 2016) in interprovincial migration flows. Now, this is about balanced with the number of British Columbians leaving. This is significant within such a short period. In the column, Jock and Ken speculated on the reasons which might explain this – one of which is the high cost of housing, particularly in BC’s major urban centres.

On other reasons that may have caused the interprovincial migration shift:

By no means is it all due to housing. Cross-country movement tends to reflect differences in the state of provincial economies and job markets—these are the biggest factors in the level of inter-provincial migration to BC (though housing does play some role). Over the past two to three years, BC has had a robust economy and labour market until recently, and Ontario has been doing very well in the past 18 months. Alberta, which was hammered by the oil collapse and in a deep recession in 2015-2016, bounced back in 2017 and seems to be staying strong this year. This has reduced the number of Albertans coming into BC and other parts of Canada.

On if there’s been an increase of British Columbians leaving for other provinces:

It’s complicated. We get these international and interprovincial migration “flows” reported by Stats Canada, but we don’t know who they are or why they’re moving (there’s a lot of speculation and Jock prefers to have data from which to draw conclusions, but the data is limited). A fair number of these people are Canadian-born residents of Metro Vancouver who leave for other parts of BC, such as Vancouver Island, the Okanagan, or the Kootenays.

The basic picture in Metro Vancouver is we lose, in net terms, small outflows of the Canadian-born population (maybe they’re going to school, taking jobs, or retiring elsewhere), but this is more than offset by international flows. BC sees 35,000-40,000 international immigrants each year, of whom the vast majority settle in Metro Vancouver. So, net international migration really drives population growth, whereas we probably lose a few people from interprovincial migration. You can easily observe this in Metro Vancouver, as it’s a very diverse city.

On if all migrants are created equal or if there’s a “preferred” migrant, when it comes to the economy:

From an employer or economic perspective, to meet labour needs in BC or Metro Vancouver, the most valued migrant (Canadian or international) is relatively young, of working-age, and seeking employment. Retirees create demand for goods and services but they also create more costs, especially within the health care system.

On if there are implications to the outflow of migrants in BC:

They’re monitoring the outflow because there’s anecdotal evidence (which Jock sees in his own work) that employers are finding it hard to attract and retain talent in Metro Vancouver. There is quite a concern among business leaders in this region about the implications of high housing costs on our ability to attract and retain talent. This plays out in an acute way within the Canadian-born population – the group we’re losing on a steady basis, though not in huge numbers. A question for the future is whether we’ll see an acceleration of these outflows of the Canadian-born, working age population. The classic case is with people in their thirties who want to have children; this is when the high cost of housing really becomes apparent. To acquire more space can mean long commutes to work, so it becomes more attractive to move elsewhere. There is some risk (not yet seen in the data) that there will be substantial outflows of working age people from this region, much more so than the smaller numbers we see today.

On how industry in the province would deal with an abrupt labour shortage, if we do see large outflows:

It’s pretty serious. We’re currently operating in what economists describe as a “full employment economy”—there’s very little underutilized labour available. BC has the highest job vacancy rate in Canada, and Metro Vancouver’s rate is likely higher. There are many help wanted signs up in various retail areas.

Industry will deal in a few ways. There will be upward pressure on labour costs. Wage increases have accelerated in the past year. Employers will have to pay more for certain labour and at a faster rate than we’ve seen in the past decade. Government is stepping in to move in the same direction with higher minimum wages. Also, some employers will look for lower-cost jurisdictions in which to move or expand their operations. Jock has seen anecdotal evidence, but the trend could accelerate. However, if population flows shift so we’re losing more people, this could soften housing demand and prices (though if international migration inflows sustain at the same pace of the past 10-15 years, this could create ongoing housing demand).

On if the foreign buyers’ tax, now at 20%, has curbed the inflow of international migration to BC:

It’s influenced the inflows of foreign capital into residential real estate, but Jock hasn’t seen evidence it has reduced inflows of people, for instance through the immigration program. The foreign buyers’ tax isn’t aimed at immigrants, it’s aimed at people who are not paying Canadian income tax. At the margin, perhaps the increased taxation of housing might be dampening immigrant inflows a bit, but there’s no evidence on a substantial level.

To find out more about Jock and the BCBC:

The majority of the BCBC’s research and publications are on www.bcbc.com. You can also find the Council on LinkedIn, Twitter, and Facebook.

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