Quebec tenants are not at the end of their troubles: the Canada Mortgage and Housing Corporation (CMHC) has just published a report which describes a historic housing crisis long decried by stakeholders in the sector.
“The numbers couldn’t be clearer. It’s a catastrophic report,” immediately launches Véronique Laflamme, spokesperson for the Popular Action Front in Urban Redevelopment (FRAPRU). The CMHC report revealed Wednesday by the organization shows falling vacancy rates and record rent increases across Quebec while new arrivals, looking for housing to rent, are flocking. Here is what emerges from the report.
Drastic increase in rents
The explosion in housing prices in Quebec is unprecedented since 1990, according to the CMHC report. Montreal saw a record increase of 7.9% in average rent. Quebec also experienced its largest increase in 30 years with an average increase of 4.8%. In Gatineau, the increase rose to 8.9% on average for a two-bedroom dwelling.
“Rents have increased faster than the average salary in the region (4.5%). The affordability of the rental market has continued to erode,” indicates CMHC.
And for the first time, the average rent in Quebec has passed the $1,000 mark.
“We were already talking about unaffordability in Gatineau and Montreal, but there, it affects all regions and small towns,” raises Véronique Laflamme, from FRAPRU.
- Listen to the interview with Jacques Demers, president of the Quebec Federation of Municipalities via QUB:
Vacancy rate down
Housing vacancy rates in Quebec have reached their lowest levels since 2003, reaching 1.3%, half the market equilibrium threshold of 3%.
“For the entire province, it’s rarely seen, it’s huge,” underlines Véronique Laflamme, from FRAPRU.
And according to CMHC, three quarters of Quebec regions have vacancy rates of 1% or less. This is particularly the case for Trois-Rivières (0.4%), Drummondville (0.4%), Rimouski (0.5%) and Salaberry-de-Valleyfield (0.2%).
“We realize that it is especially in the high-medium rent range that vacancy rates are the lowest,” explains Marguerite Simo, housing search specialist for CMHC.
Immigration, interest rates and youth employment
The increase in demand for rental housing can be explained in particular by the massive influx of immigrants since they initially turn mainly to rental, like foreign students for example, indicates the CMHC report.
The increase in access to employment among young people aged 15 to 24, particularly in large urban centers like Montreal, has also brought new tenants to the market, estimates CMHC.
But it is also because of high interest rates that many tenants remain in the rental market rather than buying a first property.
“This then puts pressure on the rental market since there is less turnover,” explains Marguerite Simo, housing search specialist for CMHC.
- Listen to the interview with Francis Cortellino, senior economist at the Canada Mortgage and Housing Corporation on Alexandre Dubé’s show via QUB radio :
Lack of construction
If pressure is also increasing on the rental market, it is because there is a lack of construction of new housing, says CMHC, which believes that supply is still far too low to meet demand.
“This situation is all the more worrying as the growth in supply is expected to slow in 2024. In recent months, fewer construction sites have started due to the increase in construction and financing costs,” notes CMHC. For Véronique Laflamme, this report demonstrates the urgency of the situation in Quebec.
“The solution will not be to flood the market with new housing that is too expensive, Quebec must build social housing,” she concludes.
And in Canada
The housing crisis continues to plague across Canada as vacancy rates have fallen across most of the country and rents continue to rise.
To have a stable market, the vacancy rate should be around 3%. In the country, this reached 1.5% in October 2023.
“It has not been this low since 1988, when CMHC began recording the national vacancy rate,” says the Corporation.
In October 2023, Vancouver has the lowest rate with only 0.9%, followed by Toronto (1.4%) and Calgary (1.4%), according to CMHC. But it was Edmonton which experienced a drastic drop from 4.3% to 2.4% between October 2022 and October 2023.
This lack of supply is causing the price of two-bedroom homes to jump 8% across the country, a record high since “at least the 1990s,” according to the analysis.