The concentration of moves at 1er July being behind us, the housing crisis is not tempered for all that. Worse still, it could be long term.
In its 2022 survey, the Canada Mortgage and Housing Corporation (CMHC) looks back on the tightness of the rental market and the well-felt increase in rents, which is spreading to an increasing number of urban centers in Canada.
We know the main causes: the intensification of demand, under the influence of strong immigration and the vigor of the labor market, the supply of properties not meeting demand and the strong increase in interest rates. of interest reducing the accessibility of the property for many tenants are among them. These ingredients remain in place to fuel a sustained housing crisis.
For Quebec, the CMHC highlighted, in a report published in January, that the vacancy rate on the island of Montreal fell from 3.7% to 2.3% in 2022, a drop explained by the strong rebound international migration and a deterioration in home ownership. Under the influence of this last factor, the demand for rental housing therefore shifted towards the suburbs, which continued to have a vacancy rate hovering around 1%. In Quebec, the overall vacancy rate in the region stood at 1.5% in October 2022, its lowest level since 2010.
“Quebec is in its fifth year in a row below the equilibrium point in terms of rental housing availability, with an average vacancy rate of 1.7% in October 2022. The proportion of municipalities with 10,000 inhabitants and more, whose vacancy rate is now below the 1% mark, has meanwhile climbed from 50% to 71% over the past year,” reads the press release of a study published on June 29 by the Institute for Socioeconomic Research and Information (IRIS).
Increasing the supply will not be enough
There is therefore a need to increase the supply of housing. The IRIS explains, however, that construction is not a sufficient solution to tackle the housing crisis, “which today affects two out of three cities in Quebec”. In the eyes of the authors, deficient regulations and the lack of community and social housing are the real causes of the crisis that Quebec has been experiencing for the past five years.
“There is a lack of affordable housing, not housing in general”, hammers the IRIS. “The number of rental housing starts has almost doubled (+102.3%) between 2016 and 2020. On the other hand, only 10% of the rental stock is made up of social and community housing in Quebec, while it reaches nearly 50% in some cities like Vienna. »
The CMHC has proposed an indicator that measures the share of housing that is affordable for tenants in the quintile (20%) of the lowest incomes. “For a dwelling to be considered affordable, its rent must be less than 30% of the household’s pre-tax income”, she retains, to conclude that “the least well-off households have access to a very small part of the rental stock “. “In major centres, with the exception of Quebec and Montreal, the share of the market that is affordable for low-income households is less than 5%. This share is 23% in Montreal, 25% in Quebec and 8% in Gatineau.
“As long as most of the rental stock is privately owned, the ability of tenants to find suitable accommodation will always be threatened,” explains IRIS.
Especially since the data also indicates that the owners of rental accommodation take advantage of the end of a lease to raise the rent to a level exceeding the increases recommended by the court, adds IRIS. CMHC data confirms this. In the greater Montreal area, “for two-bedroom apartments, there was a 28% gap between the average rent of units that welcomed new tenants ($1,235) and the average rent of those whose tenants had remained same ($963)”.
“The variation in the average rent between 2021 and 2022, for two-bedroom apartments, was the strongest in 20 years (+5.4%). On the other hand, it was 14.5% for dwellings that welcomed new tenants and 3.5% for those where the tenants had remained the same,” the report adds.
In the Quebec region, “rent growth in 2022 was […] 8.2% for two-bedroom units where there has been a change of tenants. It amounted to 3.8% for those whose occupants have not changed”.
IRIS adds that, overall, in Quebec, “the increase in the cost of rent is four times higher when a new lease is signed (13.2%) than when it is renewed by the occupants. (3.6%)”.
Migration pressure
Unfortunately, the pressure does not seem to be going down in 2023. From an immigration perspective alone, Statistics Canada estimated Canada’s population at just over 39.9 million as of April 1, an increase of 0.7% since the beginning of the year. ” It’s about […] the highest population growth rate observed during a first quarter for which comparable data are available (since 1972). [Et il] is in line with the high growth rates of the previous four quarters”, highlighted the federal agency.
During the first quarter, 98% of this population growth continued to be attributable to permanent and temporary immigration. In numbers, Canada welcomed 145,417 immigrants during the first quarter, also the largest arrival observed for a single quarter for which comparable data exist. Added to this is a net increase of 155,300 non-permanent residents, partly due to an increase in the number of work permit holders. All provinces recorded a record first quarter.