This text is part of the special Real Estate section
Last January, the Canada Mortgage and Housing Corporation (CMHC) published its Rental market reportwhich looks at the rent increases observed in 2023. Moderate increase according to some, maddening according to others… Who’s telling the truth?
In its press release, the Regroupement of housing committees and tenant associations of Quebec (RCLALQ) says it is dismayed by the data in the report and notes the explosion in rents, which have increased on average by 7.35% in Quebec. The Corporation of Real Estate Owners of Quebec (CORPIQ) instead considers the increases “relatively moderate given the significant increases in costs for owners”, citing an increase of 5.6% on the island of Montreal.
“We use two methods in our annual survey,” immediately specifies Francis Cortellino, economist responsible for analyzing the Quebec housing market at CMHC. The first compares the rents of the same rental properties two years in a row. “This allows us to compare apples to apples, and to focus on the rent increase that tenants receive,” he notes. According to this calculation, the increase on the island of Montreal for a two-bedroom apartment amounts to 8.1%. The second method compares the rents of the entire housing stock; calculated this way, the average increase in rent for a two-bedroom apartment in Montreal is 5.6%.
Historic increases
Even if the ways of calculating vary, the fact remains that the rent increases in 2023 are historic. “This is a record since 1990, we have never seen such increases,” observes Mr. Cortellino.
“No one is right or wrong,” says Xavier Leloup, professor at the Urbanization Culture Society Center of the National Institute of Scientific Research (INRS). Because if we can interpret the figures differently or highlight some rather than others, one fact remains: “Everything is growing,” he adds.
Various factors explain this increase, including low housing construction starts, increased costs of all kinds for owners (construction materials, municipal taxes, etc.). Young people who would previously have bought remain in rental properties, putting more pressure on the market. “For 10 years, the structure of the market has changed,” continues Mr. Leloup. The arrival of major international players and the financialization of housing are changing the dynamic. A recent study revealed that 0.46% of some 130,000 owners owned nearly 32% of the 566,600 housing units in Montreal in 2020. “These entities have a very distant relationship with housing, and these aggressive strategies are then adopted by smaller investors,” explains Mr. Leloup, who notes a dehumanization of the sector.
A crisis to resolve
The increases observed in 2023 exceed inflation (4.7%) and wage growth (5%), the report reveals. And the increases are even more dazzling when we consider the rent increases for rental housing. “The market is better captured by this second statistic,” remarks Mr. Leloup. “If I look for housing this year, will I be able to afford a 4 1/2 that I need? » argues Martin Blanchard, co-spokesperson of the RCLALQ. Thus, for the metropolitan region of Montreal, the increase in rents for two-bedroom housing with tenant turnover amounts to more than 18%.
Everyone therefore agrees: we are in a crisis situation, which will continue to worsen if nothing is done. “This is a really major problem, and the crisis has been going on for several years. We have to think about the system together,” underlines Mr. Leloup. “We must stop pitting tenants and owners against each other. We must share our affordable rental stock,” agrees Éric Sansoucy, president of the CORPIQ board of directors. He claims that small owners who are caught by the throat risk selling their buildings to “renovators”, who fuel the cycle of rising rents. But if times are tough for owners, “the social consequences are dramatic for tenants,” says Mr. Leloup.
The paths lawmakers should take to address the situation may not be the same, but all call for action by government. “Affordability is a societal choice, which must be subsidized if that is what we want,” believes Mr. Sansoucy. The RCLALQ, for its part, advocates capping rents and establishing a housing register. “The main problem is the lack of supervision of rent control,” insists Mr. Blanchard. “Rent is an unavoidable expense. We feel the distress on the ground, it’s frankly worrying,” he summarizes.
This content was produced by the Special Publications team at Duty, relating to marketing. The writing of the Duty did not take part.