So says a recent report by CIBC World Markets called Much Ado About Nothing: Canadian House Prices Not Based On Demographics AloneThe report dispels analysts’ fears that the effects of demographic changes - including a decreasing number of first-time buyers and an increase in downsizing and liquidation of real estate among the elderly - on the real estate market would cause house prices to fall. “The short answer is that those fears are highly exaggerated,” reads the report. 

In fact, the largest population decline in the next 20 years will be in the 45-54-year-old age group, which constitutes only 12 percent of the housing demand. “Even that limited decline in housing demand will be partly offset by the strong increase in the age group 55 to 74 and its surprisingly high housing market activity,” said Benjamin Tal, senior economist with CIBC World Markets.

The report points to immigration as another reason the real estate market will remain strong. Two-thirds of population growth since 2001 has been a direct result of immigration, and the rate of future growth in this area will put pressure on future housing demand.

The report concludes that “cyclical forces will continue to influence housing demand and prices” and that fears of a softening real estate market in the next 20 years are “largely unsubstantiated.“ In comparison to the previous housing cycle, demographic changes in the next 20 years “will not be large enough to dramatically alter housing market conditions,“ the report predicts. In addition, based on 2 percent inflation, the next 20-year cycle will mirror the performance of the last 20 years, which means that “house prices in Canada, instead of falling, will in fact double by 2026.”