Trish Bongard Godfrey

Brexit Could Be Good for Toronto Real Estate

20 July 2016
Trish Bongard Godfrey

For the past month, global news has been dominated by the British referendum on leaving the European Union. The victory for "Brexit" polarized the UK and sent its major political parties into chaos. The resulting economic turmoil could have huge, lasting consequences. The good news is, Brexit could turn out to be good for the Toronto real estate market.

Admittedly, it's tough to look for the economic silver lining when hearing reports of post-Brexit chaos in Westminster. The UK's three major political parties are in disarray, with at least two leaders resigning and Theresa May taking over from David Cameron as Prime Minister. Scotland, which voted overwhelmingly to remain in the EU, has already hinted that it may seek another referendum on Scottish independence in order to avoid being part of Brexit. Other pro-EU areas of the UK, such as Northern Ireland, face similar tough choices. Whatever happens next, the British political landscape may never be the same.

It could take years to negotiate an exit from the EU, but that will be just a taste of the negotiating to come. Every bilateral international agreement that Britan was part of through the EU will now need to be individually renegotiated. Observers, such as Canada’s internationally acclaimed author and historian Margaret McMillian, feel this could be a disaster for Britain.

Another major loss is labour mobility. British workers, especially young people, have enjoyed the ability to easily live and work anywhere in the EU. Many young British professionals have staked their livelihoods and career futures on this mobility. All that's about to change as they lose access to the European Union.

Amid this turmoil and uncertainty, Toronto real estate will likely become even hotter than it already is. The stock market is still rising, with stock markets experiencing a flight of capital to safer markets like the US and Canada. Investors seeking a safe haven for their money may likely turn to Canadian real estate, seen globally as a fairly secure, relatively affordable, and useful investment. But foreign buyers won't be the only source of post-Brexit growth. Global economic uncertainty will likely keep Canadian interest rates at historic lows, giving a further boost to real estate.

Plus, I'm anticipating a continuing wave of immigration to Canada, spurred by troubling political and economic developments worldwide. UK residents seeking to escape Brexit's aftermath – especially young people no longer able to easily live and work in Europe – may turn to Canada. So will our neighbours to the south, as many left-leaning people are already indicating that they would like a toehold outside the US.

For these migrants, Toronto is an obvious choice. Our city is an exciting, welcoming, multicultural destination, internationally recognized for our high quality of life and opportunities for young people. Although Canadian headlines warn of an overheated housing market, on a global scale Toronto real estate is still considered reasonably priced.

All in all, the coming months are years may be a volatile time for the global economy. But in Toronto real estate will likely remain strong.