Association says Quebec has shortage of 100,000 houses, apartments and social housing units

A perfect storm for Montreal moving day If you manage to find an apartment, you might not be able to get movers, in a year where the entire system is under stress.

Tenants, landlords and aspiring landlords should not expect any break in rising house prices, rent costs or obtaining a place in a low-cost housing project.

An Association des professionnels de la construction et de l'habitation du Québec (APCHQ) analysis unveiled Monday indicates that there is a shortage of no less than 100,000 housing units in Quebec.

Anf there is no sign of the housing shortage going away. In the case of single-family homes, based on the ratio between listings and home sales, the APCHQ concludes 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 sharp increases in the average price of properties over the past two years.

The surge is not insignificant: the average price of properties in Quebec, all categories combined, has jumped by 16 per cent in 2020 and then by 19 per cent in 2021, the result of unprecedented bidding by buyers who are too numerous for the number of properties available.

VACANCY RATE TOO LOW

On the private rental housing side, the analysis points out that the balance between supply and demand is considered to be reached when the vacancy rate is at 3 per cent. However, for the past four years, the vacancy rate for private rental units in Quebec has been below this threshold, which again indicates a shortage.

The APCHQ estimates this shortage of rental units at approximately 15,000, which has translated into average rent increases in Quebec of 3.7 per cent in 2020 and 3.6 per cent in 2021.

SOCIAL HOUSING SHORTAGE

Finally, the search for social housing, which has always been a demanding quest, has become a real obstacle course. To determine the number of social housing units that should be built, the APCHQ adds up the number of households waiting for rent support to arrive at a total of 37,000 for all of Quebec.

The Association knows that there are no miracle solutions.

"It is absolutely necessary to rapidly increase the supply of housing in Quebec," the analysis reads.

It emphasizes that it is necessary to go well beyond the construction of housing units to meet the needs of a growing population and to add more units to fill this important deficit. Even with 10,000 more units per year than the population growth needs, it will take at least 10 years to close the gap.

3 OBSTACLES TO CATCHING UP

The ambitious goal of balance will not be easy to achieve.

The authors of the analysis identify three obstacles on the road to restoring balance, starting with another shortage: labour.

Second, unsurprisingly, are the supply difficulties brought on by the pandemic, which has caused construction costs to soar, dependent on the explosion in the price of materials and transportation costs.

The APCHQ estimates that this inflationary push is responsible for a 17 per cent increase in the price of a new home 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 impact: on the one hand, builders are faced with an increase in the cost of financing real estate projects, while on the other hand, potential buyers are faced with an inflationary shock when it comes to negotiating a mortgage.

"In this environment, accelerating the pace of housing construction while maintaining reasonable prices for new homes is an enormous challenge," the analysis says. "The Association recognizes that it will take a surge of ingenuity and a mobilization of the housing sector to find innovative and effective solutions that can be deployed in the shortest time possible."

In any case, the association warns that its data are estimates and as such, they are only "indicative of the order of magnitude of the structural housing deficit."

Estimated deficit in the number of properties for sale at the end of 2021

Estimated deficit in the number of private rental units in October 2021 (By census metropolitan area):

Number of households waiting for a public HLM or a rent supplement as of December 30, 2021 (by administrative region)

-- This report by The Canadian Press was first published in French on June 20, 2022.