2011-2012 Housing Market Outlook (Province of Quebec)

MONTRÉAL, QUÉBEC--(Marketwire - Aug. 24, 2011) - According to the latest forecasts conducted by Canada Mortgage and Housing Corporation (CMHC), a growing economy, still favourable borrowing conditions and sustained net migration will continue to support Quebec's housing markets in the next two years.

As a result, "47,500 housing starts are expected in 2011 followed by 44,300 starts in 2012. Solid household spending and private investment will support job creation and, in turn, housing demand", explained Bertrand Recher, Senior Market Analyst at CMHC. GDP is expected to grow by approximately 2.5 per cent in 2011 and by 2.4 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 immigration 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 enter the market in response to their changing housing needs.

According to CMHC's base case scenario, posted mortgage rates will remain relatively flat in 2011 before starting to increase moderately in 2012. For 2011, the one-year posted mortgage rate is assumed to be in the 2.7 to 4.0 per cent range, while three and five-year posted mortgage rates are forecast to be in the 3.5 to 6.0 per cent range. For 2012, the one-year posted mortgage rate is assumed be in the 2.6 to 4.0 per cent range, while three and five-year posted mortgage rates are forecast to be in the 3.3 to 5.6 per cent range. These ranges reflect the current heightened level of uncertainty in financial markets.

Single Starts: For most of last year, new construction of single detached homes has benefited from the improved economic and financial environment as well as from the reduced supply of such homes on the resale market. However, slower job growth and the recent easing of the resale market have taken pressure off of new construction. Approximately 17,500 single detached homes will be started in both 2011 and 2012. It must be added that a trend toward the more affordable multi-family 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 multi-family housing, multiple starts will reach the 30,300 unit mark in 2011 and 26,500 units in 2012.

Resales: Given a weaker start during the first half of this year, the MLS® will record a lower level of sales activity than the previous year. Again this year, sales of existing condominiums (town houses or apartments) will be an important component of the total. As a result, 77,000 MLS® sales are forecast in 2011 and 79,700 in 2012", added Bertrand Recher, Senior Market Analyst at CMHC.

Prices: Relatively stable demand for resale homes, combined with rising supply, will take some 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 to $251,500 and $256,400, respectively.

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.

CMHC Housing Market Forecasts: Province of Québec - Summer 2011