Quebec Steps Up
La belle province has its housing groove back
By Frank O’Brien
Montreal is expected to see 19,000 multi-family starts in 2018, 30 per cent of them condos, such as this 17-unit townhouse project by Brivia Group and Tianco Group.
Quebec’s housing market has awoken from a near-decade slumber to post some startling numbers. In 2017, housing starts soared seven per cent from a year earlier to post the highest annual starts—47,664—since 2000.
The province is on pace to see similar starts this year, according to Canada Mortgage and Housing Corp., which predicts they could remain in an elevated state into 2019.
The resale-housing sector is also on fire, with 82,600 sales through the multiple listing service (MLS) in 2017 – a four-year high – and forecast for only slightly lower sales this year, due to higher mortgage rates, according to Desjardin, the Quebec credit union.
“The extremely favourable economic backdrop for Quebec consumers is fueling this surge in Quebec’s residential sector,” Desjardin stated in a recent report on the province’s housing market.
CMHC said sales of existing house in Quebec could notch as high as 88,000 units this year. Average home prices are forecast to increase by about five per cent to $315,000 in 2018, with most of the gains seen in Montreal and Quebec City.
The Quebec housing starts and sales remain well back in third place behind Ontario and British Columbia, but Quebec does not have a foreign-home buyer tax or the series of demand-shattering regulations that have rolled out in B.C. and Ontario over the past year.
In fact, Desjardin notes, $1 billion in Quebec tax cuts for individuals “will help the residential sector see another bumper year” in 2018.
Quebec’s consumer confidence index is at the highest level in 12 years and many consumers are planning to make a major purchase in the coming months, the credit union adds.
Much of that confidence is tied to strong employment. Quebec’s jobless rate fell to 4.9 per cent in December, the lowest monthly rate in 40 years. Increases in full-time work accounted for almost all the 86,700 jobs added in 2017, including 26,000 in December alone.
The strong housing market is adding even more jobs. The City of Longueil is plunging ahead with a $500 million mixed-use, transit-linked development that will include more than 500 condos.
Montreal-based Devimco Immobilier will develop the project that will be built above the Longueuil-Université-de-Sherbrooke Metro station. In total, it is expected to include one million square feet of real estate, with condos, rental housing, a hotel, office space and retail.
The project will be ongoing for years and indicative of the most hectic Montreal construction pace in decades.
Last year 24,756 homes were started in the Montreal census metropolitan area, the highest level since 2005 and an increase of almost 40 per cent from the previous year, according to the CMHC. Of that 19,400 were apartments, a third of which were condos. CMHC is forecasting up to 19,000 new Montreal apartments could break ground this year.
Montreal’s rental vacancy rate is around 2.8 per cent, down from 4.1 per cent a year ago, though rents are a relative bargain compared to Toronto or Vancouver, at an average of $840 for a two-bedroom.
CMHC notes that high immigration will underpin Quebec’s housing market. Total net migration is expected to reach 46,000 annually over the next two years.
The Quebec government said it has no plans for a foreign-home buyer tax but would monitor the purchase of homes by foreign investors.
The first half of last year saw a 30 per cent increase in the number of foreign homebuyers in Montreal over the previous year, according to CMHC. But the total number of foreign buyers in the city still accounted for only 1.3 per cent of all real estate transactions in the six-month period.
Paul Cardinal, an analyst with the Quebec Federation of Real Estate Boards, said the number of foreign buyers is still too low to have a significant impact on Quebec housing prices.
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