Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

December 03, 2015 12:00 ET

CMHC Housing Outlook Conference

MONTRÉAL, QUÉBEC--(Marketwired - Dec. 3, 2015) - Canada Mortgage and Housing Corporation (CMHC) presented its annual Housing Outlook Conference for the province of Quebec and the Montréal census metropolitan area (CMA) today to over 800 industry professionals. Under the theme "Beacons to guide you," the speakers analyzed the state of the real estate market in the province and the Montréal census metropolitan area (CMA) and also spoke about what will shape tomorrow's market.

Provincial Outlook

The gradual acceleration in Quebec's economic growth will slightly stimulate housing demand in 2016 and 2017. "While the resale market will tighten slightly, the aging of the population will give a boost to residential construction, especially in the multi-unit housing segment," said Kevin Hughes, CMHC's Senior Economist for Quebec.

The outlook for the Canadian housing sector, which suggests activity will remain stable overall, is subject to some national and global risks. Future oil price developments remain the most significant risk for Canadian economic growth by resulting in significant losses in export and fiscal revenues. Household debt levels remain high and will continue to be an important risk and vulnerability factor.

Another risk factor for the outlook has to do with overvaluation. The Montréal and Québec CMAs currently show significant signs of overvaluation. "This especially reflects the dampening effect of economic and demographic factors that do not fully support the prices observed," added Hughes.

Montréal Census Metropolitan Area

In 2016 and 2017, Centris® sales will rise by 4 per cent and 2 per cent, respectively. "Market conditions will tighten somewhat by 2017, but the condominium market will again be favourable to buyers. The increase in the average Centris® price will continue to hover around 2 per cent per year," said David L'Heureux, Principal, Market Analysis, at CMHC.

"On the new home market, with the condominium market running out of steam, many builders looking for other opportunities will opt to build rental housing units in 2016 and 2017. Starts of seniors' residences will also remain significant during this period," explained Francis Cortellino, Principal, Market Analysis, at CMHC. On the condominium market, "inventories of new vacant condominiums remain high, so condominium starts will decrease somewhat to about 7,000 units per year in 2016 and 2017, a more sustainable level," added L'Heureux.

The vacancy rate for rental condominiums reached 3.0 per cent in 2015. "Based on the analysis of property assessment rolls for newer condominium buildings1 in the Ville-Marie-Île-des-Sœurs sector, 25 per cent of the condominiums are owned by investors. This rate falls to 5 per cent in the case of foreign investors, but results vary from one building to the next," added Cortellino. The vacancy rate on the conventional rental market in the Montréal CMA will continue to increase until 2017 and reach 4.4 per cent.

The Island of Montréal and Its Suburbs: Trends and Conditions

On the resale market, Centris® sales of single-family homes and condominiums rose on the Island of Montréal and in the suburbs, with the increase in activity concentrated in the most expensive sectors. "Experienced buyers with the highest budgets stimulated the activity on the CMA's resale market this year," said Tania Bourassa-Ochoa, Market Analyst at CMHC.

On the new home market, freehold housing starts2 continued to slow down and be concentrated in the suburban sectors, where more lots are available. "The expected slowdown in condominium starts in most of the sectors of the CMA will moderate the anticipated increase in inventory in 2016 and 2017. However, in Ville-Marie, given the high number of units under construction, the number of unsold condominiums is bound to grow over the next few years," added Geneviève Lapointe, Senior Market Analyst at CMHC.

While some people purchase a home to live in it, others also purchase a home as an investment. For newer rental condominiums in Ville-Marie and Île-des-Sœurs listed in the Centris® system, cash flows varied markedly from one investor to the next, but were on average slightly negative (-1 per cent). In the case of rental buildings with six or more units, parity indicators are stabilizing (gross income multiplier [GIM] and overall capitalization rate [OCR]) in the various sectors of the CMA.

As Canada's authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

Follow CMHC on Twitter @CMHC_ca.

(1) Buildings with 100 or more units completed in 2014 for which property assessment rolls were available as at September 2015
(2) Single-detached, semi-detached and row homes

Contact Information