Housing starts fell 16% last year in Quebec, making it the Canadian province where the pace of new home construction has slowed the most, despite demand remaining strong.
This is what emerges from data released Tuesday by the Canada Mortgage and Housing Corporation (CMHC). These show a 16% decrease in housing starts in the Belle Province for the whole of 2022, compared to the previous year. Quebec is followed by Nova Scotia, where the number of housing starts fell by 8% last year.
CMHC data also show a 44% drop in housing starts in Quebec in December 2022, compared to the same month last year, while they instead experienced an average growth of 3 % nationwide.
“It was a rather gloomy month of December” for Quebec, laments the director of economic services at the Association of Construction and Housing Professionals of Quebec (APCHQ), Paul Cardinal.
The decline in housing starts continues to continue in Montreal as well as in its northern and southern suburbs. Thus, this pace of housing construction, intended for both owners and renters, fell by 25% in 2022 in the metropolitan area. It should be noted, however, that a record number of housing starts had been reached in 2021. The number of new constructions started in 2022 thus remained relatively similar to what it was before the pandemic, explains to the To have to CMHC analyst Francis Cortellino. “The year 2021 was a record,” he recalls.
This decline from one year to another affects all types of construction, including single-family homes, condominiums and rental apartments, notes the analyst. The decrease in new constructions on the rental market in the Montreal region is however influenced by the “sharp” slowdown in housing starts for residences for the elderly (RPA), notes Mr. Cortellino. Many RPAs have had to close their doors last year for financial reasons, almost everywhere in Quebec.
Rising construction costs may also have undermined developers’ interest in starting new projects, while aspiring homeowners postponed the purchase of a new property when they saw mortgage rates rising in the last few months, continues the analyst. These are all factors that have played into the drop in housing starts in the Montreal region and which could “create pressure on the rental market” in the coming months, warns Mr. Cortellino.
“We know that there are several projects [immobiliers] which have been put on hold in recent months, which is of course not good news for vacancy rates” on the rental market, Mr. Cardinal also notes. In 2021, already, the number of rental units available had tightened in several regions of Quebec. However, “there is little chance that the situation will have improved” last year, continues the director of the economic service of the APCHQ.
All over Quebec
This slowdown in housing construction was generalized in the province last year, with the exception of Gatineau and Trois-Rivières, where new housing starts increased by 30% and 7% respectively in 2022, compared to the previous year. A situation that Paul Cardinal attributes in particular to an increase in interest in the construction of rental housing in these two regions, which have attracted new residents who previously lived in Montreal in particular.
The pace of housing construction for its part experienced a decrease of 33% last year in Sherbrooke, 12% in the Quebec region and 3% in Saguenay, indicates the CMHC. Paul Cardinal is optimistic, however, that this slowdown will be temporary and that housing starts will pick up again when “financing conditions are more advantageous” and interest rates begin to fall.