Monday, March 26, 2012

BC Population Growth to Q4 2011

BC Stats released its quarterly population estimates and BC continues sluggish growth through Q4 2011.

Population growth consists of the following bulk components:
  • Natural increase (births - deaths)
  • Net interprovincial migration
  • Net international migration (including permanent and non-permanent residents)
So let's look at how recent quarters look in a historical context (there is seasonality so quarters are best compared to each other):

The most recent Q4-2011 data indicate continued negative net interprovincial migration and dropping net international migration from 2010.

Below are graphs of NPR migration and annual population growth up to 2011. The drop off in 2010 is most likely due to changes in federal worker visa requirements, a one-time change. 2011 saw renewed NPR in-migration and gives some guidance as to what types of dwellings will need to be available to house such residents.
If we look back to CMHC housing data I highlighted here, there unsurprisingly appears to be some correlation between housing starts/completions and population growth. But of course the adage that correlation does not mean causality applies here; nonetheless we can look for cross-correlation and see if one leads the other. In other words, does rising population growth beget housing, or does simply building more houses bring in more people? Some evidence is below:
This graph states that the peak correlation occurs when completions are shifted backwards by about a year -- housing completions lag population growth; conversely, housing starts lead population growth. But does that mean "build it and they will come"? Yes, but perhaps not based on the intent of the original author. Starts leading population growth indicate the initial ground breaking will start drawing residents from other locales but, ultimately, once dwellings are built, that growth is to some degree ephemeral. Something to keep in mind.

Weak population growth has continued through 2011, including a drop off in international immigration, most notably in the investor and skilled worker classes. These recent population data are what I would characterise as a continuing bearish indicator for BC real estate, especially for owner-occupier dwelling formation.

1 comment:

GG said...

Looking at the population components in Vancouver relative to past price changes really shows what a big component immigration is in the price equation. But is it the myth or the reality of it that has the biggest impact?