This text is part of the special Real Estate section
In June 2022, the Canada Mortgage and Housing Corporation (CMHC) demonstrated that Canada was heading towards a deficit of 3.5 million housing units for 2030, including 620,000 in Quebec. But in September 2023, the revision of the data tells us that the province would instead need 860,000!
This gap will be two and a half times greater than the expected increase in the stock of Quebec housing, which will only increase by 330,000. In other words, to meet demand, Quebec would have to build 1.2 million housing units. all types − single-family or semi-detached houses, housing in a condominium, standard or social rental apartments − by 2030.
CMHC Deputy Chief Economist Aled ab Iorwerth explains that these data are based on a series of assumptions (demographics and migration flows, interest rates, income growth, economic activity). “The British have shown that we almost always underestimate the real demand for housing if we limit ourselves to forecasting it on the basis of the number of households. »
Reality can, however, diverge from hypotheses, he agrees. This is precisely why CMHC refined its predictions according to two scenarios: low economic growth or high population growth. In the first case, the pressure decreases slightly: there would then only be a shortage of 770,000 housing units instead of 860,000. Conversely, if significant migratory flows increase the population, the Quebec shortage would amount to 1.1 million housing units per year. compared to available stock.
The most recent figures released by the Canadian Real Estate Association (CREA), which focuses strictly on the property market, point in the same direction. Shaun Cathcart, senior economist at ACI, notes that interest rate hikes over the past 18 months have completely flattened the market. “And if interest rates are slow to return to their pre-COVID level,” he predicts, “the recovery will be rather slow. »
New indicators
Over the past two years, CMHC has modified its approach to the rental market, which represents almost 40% of the Quebec market, compared to less than 30% in the other provinces, according to data from the Société d’habitation du Québec. “Since we look at it from an affordability perspective, we discover a lot of things,” says Aled ab Iorwerth.
Two new indicators, presented for the first time last June, confirm the complaints of tenant associations about the tightening of the market.
The first indicator concerns the share of affordable housing. This calculation is made on the basis of a price which corresponds to 30% of income for the least well-off quintile of households.
This indicator shows that Quebec stands apart. In Ontario, the share of the market that is affordable for low-income households is almost zero almost everywhere. In Vancouver, that’s 1%. Edmonton stands out at 13%. Quebec and Montreal sit at 25% and 23% respectively. “We don’t explain it well,” admits Aled ab Iorwerth, according to whom this statistic simply illustrates the fact that there are more rental housing units in these two markets. “The situation is not necessarily the same in the region. » In fact, the share of affordable housing in Gatineau drops to 8%.
A second indicator also illustrates the upward pressure on rents. This indicator compares the average rents of new tenants compared to housing occupied for more than a year. It seeks to measure whether owners take advantage of tenant turnover to adjust the price according to its market value, adding renovation and repair costs.
This is indeed the case for the large cities that were considered: the difference is around $500 in Toronto and Vancouver and $250 in Montreal, while in Edmonton and Calgary, this difference is only $27 and $88 respectively.
“We are not sure of the cause, but the factor that would play here is the intensity of urban planning regulations which creates scarcity in the construction of rental buildings,” explains the economist. “In Edmonton, permits are granted quickly, so more rental buildings are built there faster. This was for a long time Montreal’s advantage over the other two metropolises, but this advantage is fading because municipal regulations are becoming more severe. »
Build more
Shaun Cathcart, economist at the ACI, is categorical. “Currently, supply is not keeping up with demand and will not be able to catch up,” he said. To restore balance, it will take a plan to build like we have never built before. »
Build what? “Social housing needs more. But even if we doubled it, which would already be enormous, that would only solve part of the problem, says Aled ab Iorwerth. It will take more housing of all types. But it will also take more permits faster, and more technology in construction. »
According to him, it is high time that the construction sector tackles its lack of productivity. “All the studies show it: this sector is notoriously unproductive. Across the continent, nothing is improving. »
However, governments will have to come up with better housing policies that are better coordinated between the various levels, he maintains. “Quebec is starting to generalize the Toronto practice of passing on infrastructure development costs to real estate developers. In Toronto, that adds $100,000 per unit. It doesn’t promote affordability. »
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