There is a real housing crisis, to say the least. The seriousness of the situation requires that the government quickly mobilize all the partners concerned in order to deploy a major and unifying recovery plan.
The balance sheet
After peaking in 2021, residential starts in Quebec fell by 16% in 2022, followed by a decline twice as pronounced in 2023, a dramatic drop of 32%.
Dramatic, because this sluggishness affecting residential construction hurts all the more as it occurs at a time when Quebec is seeing its population grow at a rate that has not been observed since the end of the “baby boom”. More than 300,000 people have been added over the last two years, representing growth of 3.5%.
Whether Quebec’s economy is technically in recession or slowing down, the sharp decline in housing starts is certainly not unrelated to this state of affairs.
According to economists at the National Bank of Canada, “the supply deficit has reached a new record”.
We then see that the increase in housing prices is well above overall inflation. According to the most recent data, “housing continued its outsized contribution to overall inflation.” For Canada, the difference between rent inflation and CPI inflation “is the highest in over 60 years” and rent inflation “is the worst in over 40 years.” The declines observed in Quebec in housing starts also contribute to the fact that the growth in housing prices is stronger here than in Ontario and British Columbia.
This situation also contributes to the fact that property prices are still increasing. According to Royal LePage, the value of properties in Greater Montreal has increased by 30.6% since 2019. Note that over the last two years, the population has increased by 5% for the metropolitan region of census of Montreal and 7% for the island of Montreal.
Perspective
For 2024, Desjardins anticipates a third consecutive decline for Quebec. For its part, the Quebec Construction Commission forecasts for the coming year a drop in hours worked in the residential sector, almost of the same order as that observed in 2023.
Needs
In its latest update concerning the quantity of housing needed by 2030 to return to a level of affordability observed around 2004, CMHC indicates that 860,000 more housing units would need to be built in Quebec than the anticipated number of new constructions. , for a total of nearly 1.2 million units to be built. Taking into account the data for 2023, this means that around 164,400 new units would need to be started annually, for the next seven years!
For the last 10 years, the annual average is 47,500 units. By wanting to bring back the affordability levels observed around 2004 by 2030, the chosen catch-up horizon is much too tight. However, this report clearly illustrates the needs and the scale of the task!
The necessary recovery plan
The sum of $1.8 billion announced in the fall 2023 update on Quebec’s economic and financial situation is a significant gesture but, given the scale of the crisis, a greater range of measures is needed. and, quite possibly, additional budgets.
Temporary initiatives, mainly to mitigate the effects of inflation and interest rates, and structural initiatives, in particular to simplify approval processes, improve productivity, deal with labor shortages and adapt to climate change, particularly by allowing more appropriate densification around public transport and service routes, are necessary.
It is essential that the Government of Quebec convene all the partners. Quebec must adopt a major recovery plan with ambitious but achievable objectives. A recovery plan which involves all stakeholders, who must also make their own contribution to this essential national effort, and which covers the entire continuum (social and community housing, affordable housing and access to property).
With all the suggestions put forward in recent months, including those of a coalition of 21 stakeholders, and the consultations led by the Minister of Housing, as well as the actions taken by certain municipalities and the government federal government, it is time to collectively take action. There is an urgent need to begin to emerge from the crisis, the serious social, economic and humanitarian, even environmental, consequences of which are no longer in doubt.
At the start of 2024, resolutely tackling the housing crisis is one of the main challenges facing Quebec.