The Quebec Real Estate Market is Facing an Unprecedented Crisis

The rise in property prices, increased rents, and the shortage of available housing are creating a particularly difficult situation, especially for low-income households. In response to this situation, the CAQ government presented the Quebec Housing Strategy on August 22, proposing solutions to increase the supply of housing and ensure affordability.

The Causes of the Crisis

According to the government, this housing crisis stems from several interconnected factors. On one hand, construction costs have risen sharply due to the high prices of materials, land, and services. On the other hand, the demand for housing has exploded with the massive arrival of new residents, both due to immigration and internal migration. These pressures have led to skyrocketing prices, particularly affecting rental households in large cities like Montreal.

In fact, the Quebec real estate market is suffering from a lack of balance. The number of new constructions dropped by 43% between 2021 and 2023, largely due to financial challenges and labor shortages. Yet, the demand continues to rise. The government estimates that construction starts must increase by 25% to reach 560,000 units by 2034 to meet the needs of Quebecers.

The Objectives of the Quebec Housing Strategy

The Quebec Housing Strategy aims to restore balance to the residential market so that every household can find housing that meets their needs while staying within their means. To achieve this, the government plans to invest an additional $3.7 billion over the next five years, bringing total housing investments since 2018 to $6.3 billion.

A Concrete and Evolving Approach

The strategy is based on two main pillars:

1. Creating a favorable environment for increasing the housing supply:

   • Supporting productivity in the construction sector by facilitating workforce training and retention.
   • Modernizing construction methods with solutions like prefabrication and digital modeling.
   • Accelerating the completion of residential projects by removing administrative obstacles.
   • Making use of existing buildings by repurposing or converting them.

2. Supporting households according to their needs:

   • Speeding up the construction of social and affordable housing.
   • Helping low-income households pay their rent and facilitating access to homeownership.
   • Addressing the specific needs of elderly households, students, and those in precarious situations.

A Major Challenge: Urban Planning Rules

A major challenge lies in the rigidity of municipal urban planning rules. An article published in La Presse by Louis-Benoit L'Italien-Bruneau, Director of Urban Planning for the firm Paré + Associés in Laval, highlights this challenge (https://www.lapresse.ca/dialogue/opinions/2024-08-27/strategie-quebecoise-en-habitation/des-regles-d-urbanisme-toujours-aussi-rigides.php). The article points out that overly strict zoning regulations and cumbersome municipal procedures are slowing down the construction of new housing. The author cites research showing a direct relationship between rigid zoning rules and higher housing costs. In comparison, some U.S. states have adopted bolder reforms to speed up construction and lower prices, while measures taken in Quebec, according to the author, remain timid.

A concrete example supporting this challenge is the Royalmount project, which was the subject of a report by Mathieu Prost on ICI Radio-Canada. While many experts and political stakeholders support the construction of residential towers within this project, the Ville Mont-Royal City Hall alone is blocking these developments, underscoring the difficulties that municipal regulations can impose on large residential projects.

Conclusion

The Quebec Housing Strategy is a response to the housing crisis facing the province. However, as we can see, a persistent challenge lies in the rigidity of municipal urban planning rules, which hinder essential residential projects. Collaboration between the government, municipalities, and private actors will be crucial to overcoming these obstacles and effectively addressing the growing demand for affordable housing.

Nevertheless, for me, as a real estate broker, this strategy represents a step in the right direction to improve the Quebec real estate market and better meet the needs of our clients who are struggling to find housing.

If you have any questions regarding your real estate projects or want to learn more about market developments, don’t hesitate to contact us. We are here to guide you every step of the way in your real estate journey.