Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

November 02, 2009 23:59 ET

Quebec housing starts to achieve 43,000 in 2010

MONTREAL, Nov. 2 - According to the latest forecasts conducted by Canada Mortgage and Housing Corporation (CMHC), 43,000 starts are expected in the province in 2010. Sales of existing homes will surpass the 78,000 mark next year. "In 2009, a weaker economic environment, combined with increased supply of homes in certain market segments, lowered housing construction in Quebec. In 2010, a recovering economy, still favourable borrowing environment and a tighter resale market will translate into sustained new home construction," said Kevin Hughes, Senior Economist at CMHC.

As a result of improving global and national economic conditions, Quebec's economy, which has been contracting since the end of 2008, will begin to recover in the latter part of this year. Domestic consumption is already showing signs of growth while fiscal and monetary policy will continue to stimulate the economy. CMCH thus expects the Quebec economy to grow by 2.1 per cent in 2010. Nevertheless, firms will be slow to add to their payrolls and the province's labour market will grow at a slower rate. Job growth of less than one per cent is expected in 2010.

Through a variety of channels, the province's evolving demography will continue to fuel housing demand in the coming years. While the effects of population aging continue to impact multi-family housing, the recent increase in the birth rate may also be a source of demand. Finally, increasing net migration will stimulate demand for rental housing.

Interest rates

The Bank of Canada cut the Target for the Overnight Rate in the early months of 2009. The rate was 1.50 per cent at the start of 2009 and has since fallen to 0.25 per cent. The Bank has committed to keeping this rate at 0.25 per cent through the middle of 2010 unless inflationary pressures warrant an increase.

Mortgage rates have fallen over the course of 2009, but are now expected to remain relatively stable for the rest of the year. Posted mortgage rates will gradually increase through 2010, but will do so at a slow pace. For 2010, the one-year posted mortgage rate will be in the 3.50-4.25 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.50-6.00 per cent range.

In Detail

Single Starts: Starts in this segment will benefit from the improved economic and financial environment as from the reduced supply on the resale market. However, demand will be continue to be challenged by the more affordable resale market and semi-detached homes. Just over 18,000 single detached starts are expected in 2010.

Multiple Starts: Two phenomena will restrain production in this market segment: the lower growth rate of the population aged 75 and over, which will limit demand for retirement homes, and the current level of supply, which will remain relatively high. Starts in this category will drop to approximately 24,800 units in 2010.

Resales: Sales of existing homes will remain sustained in 2010. Demand for condominiums (town houses or apartments) will again be an important component of the total. However, a slowly recovering job market and lower supply will constrain sales activity. The Multiple Listing Service (MLS(R)(1)) will record over 78,000 sales in 2010.

Prices: Sustained sales activity and stable inventories will continue to exert some pressure on prices in Quebec's resale market. As a result, the MLS average resale price will post growth of 2.4 per cent to just under $224,000 in 2010.

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.


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    MLS(R) is the trade mark of the Canadian Real Estate Association.


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       CMHC Housing Market Forecasts: Province of Québec (Spring 2009)
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                  2004     2005     2006     2007     2008   2009(f)  2010(f)
               -------- -------- -------- -------- -------- -------- --------

    Residential
     Construc-
     tion
      (Starts)

      Single
       Detached
       (1)      28,871   23,930   21,917   22,177   19,778   17,000   18,200
                          -17.1     -8.4      1.2    -10.8    -14.0      7.1
      Multi-
       Family
       (2)      29,577   26,980   25,960   26,376   28,123   26,300   24,800
                           -8.8     -3.8      1.6      6.6     -6.5     -5.7
      Total     58,448   50,910   47,877   48,553   47,901   43,300   43,000
                          -12.9     -6.0      1.4     -1.3     -9.6     -0.7
    Resale
     Market

      MLS(R)
       Sales
       (3)      70,669   72,670   74,192   83,847   79,402   78,250   78,250
                            2.8      2.1     13.0     -5.3     -1.5      0.0
      MLS(R)
       Average
       Price
       ($)     167,546  180,529  190,348  202,392  210,775  218,500  223,750
                            7.7      5.4      6.3      4.1      3.7      2.4

    Other
     indicators

      GDP
       Growth
       (%)         2.7      1.5      1.7      2.6      1.0     -2.0      2.1

      Employment
       Growth
       (%)         1.4      1.0      1.3      2.3      0.8     -0.7      0.7

      Total Net
       Migra-
       tion
       (4)      36,189   29,035   28,118   32,698   39,158   43,000   44,500
                          -19.8     -3.2     16.3     19.8      9.8      3.5

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    Notes:    (1) Dwelling for wich all walls are detached
              (2) Semi-detached, row or apartment units
              (3) Multiple Listing Service (MLS(R))
              (4) Sum of net international migration, net interprovincial
                  migration and net non-permanent residents
    Sources:  Canadian Real Estate Association, Statistics Canada, CMHC;
              (f) CMHC forecasts

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Contact Information

  • For further information: Province: Kevin Hughes, Senior Economist, (514) 283-4488; Montréal: Bertrand Recher, Senior Market Analyst, (514) 283-2758; Sherbrooke (Estrie): Francis Cortellino, Market Analyst, (514) 283-8391; Québec: Élisabeth Koulouris, Senior Market Analyst, (418) 649-8098; Trois-Rivières (Mauricie): Marie-Élaine Denis, Market Analyst, (418) 649-8100; Gatineau (Outaouais, Abitibi): Patrice Tardif, Senior Market Analyst, (514) 283-2097; Saguenay: Sébastien Paquet-Poirier, Market Analyst, (418) 649-8102