According to the latest forecasts conducted by Canada Mortgage and Housing Corporation (CMHC), a growing economy, favourable borrowing conditions and sustained net migration will continue to support Quebec’s housing markets in the next two years. As a result, 45,700 housing starts are expected in 2011 followed by 44,000 starts in 2012.
The improved global and national economic environments, which have positively impacted Quebec’s economy since the second half of 2009, will continue to do so this year and next. Solid household spending and private investment will support job creation and in turn, housing demand. GDP is expected to grow by 2.1 per cent in 2011 and by 2.3 per cent in 2012.
“As was the case in recent years, a variety of demographic factors will also fuel the province’s housing markets in the coming years. Strong net migration to the province will continue to have a positive impact on the rental and resale markets.
In addition, population ageing will likely prompt older households to adjust their housing needs,” explained Kevin Hughes, Senior Economist at CMHC for Quebec.
According to CMHC’s base case scenario, posted mortgage rates will remain flat in 2011 before increasing moderately in 2012. For 2011, the one-year posted mortgage rate is assumed to be in the 3.0 to 3.7 per cent range, while three and five-year posted mortgage rates are forecast to be in the 3.5 to 5.7 per cent range. For 2012, the one-year posted mortgage rate is assumed be in the 3.5 to 5.5 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.0 to 7.0 per cent range.
2 Single Starts: Recently, starts of single detached homes have benefited from the improved economic and financial environment as well as from the reduced supply of such homes on the resale market. However, the recent easing of the resale market has taken pressure off of new construction. Approximately 18,000 single detached homes will be started in 2011. It must be added that a trend toward more affordable housing and densification will further cool this market segment in the years to come. The share of single detached housing starts has consistently declined from over 60 per cent of the total in 2001 to 40 per cent last year.
Multiple Starts: Following a strong rebound in 2010, starts of multi-family dwellings will settle back to more sustainable levels in the next two years. Given the current supply of condominium tenure apartments on the market and given the lower growth rate of the population aged 75 and over, which will continue to limit demand for retirement (rental apartment) homes, starts of multiple family homes in 2011 will inevitably decline. Nonetheless, given the trend toward multifamily housing, multiple starts will approach the 28,000 unit mark in 2011.
Resales: In 2011, the MLS® will record a similar level of sales activity than the previous year. Resale activity will pick up next year. Again this year, sales of existing condominiums (town houses or apartments) will be an important component of the total. Over 80,000 MLS® sales are forecast in 2011 and 83,600 in 2012.
Prices: Decreasing demand for resale homes, combined with rising supply, will take pressure off prices over the course of the next year. With a return to more balanced conditions, price growth in the resale market will moderate over the course of 2011 and in 2012.
As Canada’s national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions. For more information, visit www.cmhc.ca or call 1-800-668-2642.
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