QUEBEC, Nov. 13 /CNW Telbec/ - Canada Mortgage and Housing Corporation
(CMHC) presented its annual Housing Outlook Conference today to more than
500 industry professionals. Under the theme "Expanding Your Horizons," the
speakers addressed the state of the real estate market in the Québec area and
across the province and presented an overview of current and future conditions
in the Canadian housing sector.
The vigorous economy, favourable borrowing conditions and flexible
mortgage financing options contributed to the strength of the housing market
in the Québec census metropolitan area (CMA) this year.
According to the forecasts, transactions on the resale market will reach
7,400 units in 2007, for a gain of 6 per cent over 2006. In 2008, 7,550 homes
should change hands, or 2 per cent more than in 2007. While single-detached
houses still account for the majority of the sales (61 per cent of the
market), condominiums are gaining in popularity, with their market share
having doubled in ten years, from 11 per cent to 22 per cent.
The resale market will ease over the next few quarters but will remain a
seller's market. In fact, the number of sellers per buyer will stay below the
balanced range, which will result in still sustained price hikes. In 2007, the
median price of single-detached houses will reach $169,000, up by 7 per cent
over 2006. The growth in prices will slow down slightly in 2008, when the
median price for homes of this type will rise by 5 per cent to $177,000.
As for residential construction, the slowdown that began in 2005 will
continue in 2007 and 2008. Housing starts are expected to fall by 3 per cent
this year and by 14 per cent next year, to 5,000 units and 4,300 units,
respectively. The condominium segment will be harder hit than the others,
registering a significant decrease of 42 per cent in 2007, while the rental
housing segment will be dynamic, with an increase in activity of 37 per cent,
thanks to the high volume of retirement housing starts.
The Québec area traditional rental housing market will slowly ease in
2007 and 2008. The vacancy rate will rise gradually, reaching 1.9 per cent in
2007 and then 2.3 per cent in 2008. This easing will be attributable to the
considerable number of new rental housing units that have arrived on the
market in recent years and also to a small decline in demand caused by the
weaker migration observed in 2006-2007.
The retirement home market, for its part, will also be showing signs of
easing. The overall vacancy rate, which stood at 4.5 per cent in 2006, will
keep rising in 2007 and 2008, as demand cools and supply increases. A record
number of retirement housing starts will be registered in 2007, which will
contribute to the easing of this market. As well, the growth of the potential
client group for this market-people aged 75 years or older-will slow down over
the next few years, which will cause conditions to ease further.
Demographics and migration: impact on housing demand
A major driving force behind housing demand, the growth in the number of
households reached 7 per cent in the Québec CMA, between 2001 and 2006, the
year when 316,650 households were enumerated. Demographic growth in the area
was marked by significant increases in the groups aged from 55 to 74 years
(+20 per cent) and 75 years or older (+19 per cent). These gains explain the
greater interest in more luxurious properties, such as larger and more upscale
single-detached houses, and the strong appeal of the retirement home market
Over the same period, there was a slight decline in the number of
households in the group aged from 15 to 24 years (-3 per cent), the main
source of demand on the rental housing market. The number of households also
decreased among the group aged from 25 to 44 years (-4 per cent), the segment
that includes the majority of first-time home buyers.
Most of the new households settled in the cities of Québec (12,130) and
Lévis (4,750), followed by Saint-Augustin-de-Desmaures (1,549), Boischatel
(984) and Stoneham-et-Tewkesbury (600). Relatively speaking, the rates of
growth in the number of households were higher in the suburbs.
With the economic performance in recent years, the Quebec area will have
been able to attract more households and, in so doing, further stimulate the
housing market. Intraprovincial migration (+2,966) and international migration
(+2,150) more than offset the emigration of Québec households to other
Lands: source of concern
Since the second half of 2005, land prices in the Québec area have been
increasing significantly, posting gains of 7 per cent in both 2006 and 2007.
This rise in prices has been due to the fact that supply of lands is limited,
while demand remains strong. This is putting upward pressure on new home
prices and causing single-detached houses to be built farther out in the
For example, out of every 100 single-detached houses started on the north
shore in 2002, 22 were in the northern suburbs, that is, outside the
municipalities of Québec, L'Ancienne-Lorette and Saint-Augustin-de-Desmaures.
In 2007, this proportion rose to 39 per cent.
Quebec provincial market: solid fundamentals and much more
According to CMHC, job and income growth largely contributed to the
strong housing demand across Quebec in 2007. However, according to Kevin
Hughes, Regional Economist at CMHC, the recent economic conditions are not
sufficient, by themselves, to explain the rebound observed on the housing
market across Quebec during the year:
"The more flexible borrowing context and the growing interest in the
retirement home segment must also be taken into account. While it is still too
early to rigorously analyze the effect of the financial context on demand, we
believe that it also had an impact. As well, the greater supply of retirement
homes presents its own challenges to analysts, as vacancy rates continue to
climb and the province is headed for a period of weaker demand in this niche.
In addition, the fact that births jumped by 7.9 per cent to 82,000 in 2006
should also support a strong housing demand, as the arrival of a first child
often triggers young households' decision to access homeownership."
For 2008, CMHC forecasts a certain decline in demand. "We believe that
job growth will be less robust in 2008, on account of the weaker export
sector, which will affect housing demand. For multi-family housing, the
current retirement housing stock should limit construction in this market
segment. Finally, based on the Statistics Canada Census data on households, we
estimate that demand has now more than caught up and, as a result, that the
current pace of construction is not sustainable," added Kevin Hughes.
More than 52,000 housing units will therefore be started across the
province in 2007, and 48,000 more, the following year. On the resale market,
81,000 transactions will be registered in 2007, a level that will be
maintained in 2008.
Outside the major centres, residential construction is dynamic and will
remain so over the next few years. It is interesting to note that, in the
third quarter of 2007, the levels of activity recorded in smaller cities, like
Saint-Jean-sur-Richelieu (900 units) and Drummondville (781), exceeded the
volumes registered in more populous agglomerations such as Trois-Rivières
(731) and Saguenay (556). Greater affordability, economic prosperity and the
construction of retirement homes in these smaller centres partly account for
these levels of activity.
Nationally, the results are similar to the numbers for the province of
Quebec, where the levels of activity in the housing sector were significant.
MLS(R) sales will set a new record in 2007, with an expected 521,000
transactions, and then fall slightly to 500,000 units in 2008. Rising mortgage
carrying costs will cause demand for homeowner housing to edge lower and the
existing home market to move toward more balanced conditions, which will slow
the rate of increase in home prices to 10.0 per cent in 2007 and then to
4.2 per cent the following year.
Housing starts will surpass the 200,000-unit mark for the seventh year in
a row, reaching 225,700 units in 2007 and 214,300 in 2008.
Canada Mortgage and Housing Corporation (CMHC) has been Canada's national
housing agency for more than 60 years. CMHC is committed to helping Canadians
access a wide choice of quality, affordable homes, while making vibrant,
healthy communities and cities a reality across the country. For more
information, visit www.cmhc.ca or call 1-800-668-2642.
For further information:
For further information: or interviews: Julie Cohen, Communications,
CMHC, (514) 283-3679