Tenants, owners and aspiring owners should not expect a respite in house prices, the cost of rents or obtaining a place in low-income housing (HLM).
An analysis by the Association of Construction and Housing Professionals of Quebec (APCHQ) unveiled on Monday indicates that there are no less than 100,000 housing units missing in Quebec, so that we can indeed speak of a shortage.
The real estate bubble
In the case of single-family homes, based on the ratio between listings and home sales, the APCHQ comes to the conclusion that 58,000 additional properties would be needed on the market to restore a certain balance.
It is this imbalance that has led to the dramatic increases in average property prices over the past two years. The surge is not insignificant: the average price of properties in Quebec, all categories combined, jumped 16% in 2020 and then 19% in 2021, the result of never-before-seen bidding by buyers who are too numerous for the number of available properties.
Rentals with too low a vacancy rate
As for private rental housing, the analysis underlines that the balance between supply and demand is considered to have been reached when the vacancy rate is at 3%. However, it has now been four years since the vacancy rate for private rental housing in Quebec has been below this threshold, which again attests to a shortage. The APCHQ estimates this shortage of rental units at around 15,000, which translated into average rent increases in Quebec of 3.7% in 2020 and 3.6% in 2021.
HLM not found
Finally, the search for social housing, which has always been a demanding quest, has become a veritable obstacle course. To determine the number of social housing units that should be built, the APCHQ adds up the number of households waiting for low-rental housing or a rent supplement to arrive at a total of 37,000 for all of Quebec.
However, the association recognizes that there are no miracle solutions. “It is absolutely necessary to rapidly increase the supply of housing in Quebec”, we write in the analysis.
Three major obstacles to catching up
She stresses that we must go well beyond building housing to meet the needs of a growing population and adding more to fill this important deficit. Even with 10,000 more dwellings per year than population growth needs, it will take at least 10 years to make up the shortfall.
Except that such an ambitious goal will not be easy to achieve. The authors of the analysis identify three obstacles on the road to restoring the balance, starting with another shortage, that of labor in the construction sector.
In second place, unsurprisingly, are the supply difficulties caused by the pandemic, which have caused construction costs to jump, dependent on the explosion in the price of materials and transport costs. The APCHQ estimates that this inflationary surge is behind a 17% increase in the price of a new house in Quebec in 2021, an upward pressure that is likely to intensify due to the war in Ukraine. and its impact on all prices.
Finally, the upward trend in interest rates has a double consequence: on the one hand, builders find themselves grappling with an increase in the cost of financing real estate projects, while potential buyers come up against an inflationary shock when the time comes to negotiate a mortgage.
“In such a context, accelerating the pace of housing construction while maintaining reasonable prices for these new dwellings represents an enormous challenge,” we write. The association recognizes that it will be necessary to hope for a surge of ingenuity and a mobilization of actors in the housing sector “in order to find innovative, effective solutions that can be deployed as soon as possible”.
In any case, the APCHQ warns, however, that its data are estimates and that in this sense, they are only intended to be “indicative of the order of magnitude of the structural housing deficit”.