Fri. Mar 1st, 2024

Historic drop of 32% in housing starts in Quebec in 2023

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In Canada, only for single-family homes, this drop is 25%, which pulls the data downward. (Archive photo)

  • Félix Morrissette-Beaulieu (View profile)Félix Morrissette-Beaulieu

Housing starts decreased by 7% in Canada in 2023, mainly due to a significant decline in Quebec (32%), according to the most recent data from the Canada Mortgage and Housing Corporation (CMHC).

We can say that the decline observed at the Canadian level is almost entirely attributable to the situation we had in Quebec in 2023, explains Francis Cortellino, analyst and economist at CMHC.

The province recorded 38,900 housing starts in 2023, 18,200 fewer than in 2022.

According to CMHC, the trend is opposite in other provinces such as Ontario and British Columbia, where the number of housing starts has remained historically high.

Indeed, by subtracting Quebec from the Canadian data, the drop in housing starts in the country stands at only 2%. p>LoadingAn Estrie union affiliated with the FAE advises its members to reject the agreement

ELSEWHERE ON INFO: An Estrie union affiliated with the FAE advises its members to reject the agreement

The year 2023 was marked by conditions of difficult borrowing and a labor shortage, which we are starting to see in the housing starts numbers. We expect downward pressures to continue in the coming months, said Bob Dugan, chief economist at CMHC.

The significant drop in the number of starts of single-family homes largely explains this decline in Quebec and Canada.

In the country, only for houses individual, this reduction is 25%.

In Quebec, never have so few houses been built since 1955, the year the data began to be collected, notes Francis Cortellino.

The year 2023 also marks the lowest level of condo construction since the year 2000 and since 2018 for rental housing in Quebec.

In the rental segment, CMHC notes very little construction of seniors' residences.

The cities of Montreal (-37%) and the Census Metropolitan Area (CMA) of Quebec (-40%) saw their number of housing starts drop considerably in 2023.

In Montreal, 5,200 housing units were started in 2023, or 8,900 fewer than in 2022.

In the Quebec CMA, 5,009 construction sites were opened in 2023, compared to 8,920 in 2020. This region notably includes the city of Lévis.

CMHC estimates that rental housing construction remains strong, although it is also down for 2023.

It has really been the driving force behind construction in Quebec for several years. It remains strong in 2023, but it has still declined compared to last year. With many fewer houses built, many fewer condos and a decline in rental housing which is the best in construction, we are seeing a decrease in construction in Quebec of 32%, notes Francis Cortellino.

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In Montreal, 70% of construction starts in 2023 were intended for the rental market, which contrasts with the rest of Canada, which is more focused on the construction of condos.

Despite everything, these are figures that are beyond CMHC's forecasts for 2023.

After reaching record and near-record highs in 2021 and 2022, housing starts declined in 2023, but still significantly exceeded expectations for the year, according to the most recent report, dated January 16.

Moreover, the CMHC noted a rebound last December and November.

Across the country, the monthly seasonally adjusted annualized number of housing starts increased 18% in December (249,255) compared to November (210,918), the report said.

Félix Frégeau, president of Frégeau Construction, in Quebec, notes this slowdown daily, particularly for the construction of single-family homes.

In 2023, I didn’t have a single-family home to build. Yes, we feel a certain drop. Rising material costs, mortgage rates, inflation […], it's a bit of all that, notes the entrepreneur. It's difficult to make exact budgets for clients […] and give them the right price based on the price of materials. It fluctuates so much!

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Félix Frégeau, president of Frégeau Construction

It is in Quebec that the decline is most pronounced among all Canadian provinces, laments Paul Cardinal, director of the economic department of the Association of Construction and Housing Professionals of Quebec (APCHQ) .

The rise in interest rates had the effect of slowing down more real estate projects in Quebec than elsewhere due to construction sites which are generally shorter and smaller in size, according to him.

2024 is expected to be slightly better in the construction industry. We expect a small increase in 2024, but nothing spectacular, perhaps of the order of 10 to 12%, warns Paul Cardinal.

Lower interest rates and strong demand for rental housing construction should provide a breath of fresh air.< /p>

The abolition of GST on rental construction projects should also provide a boost.

The mayor of Quebec, who wants the construction of 80,000 new housing units to be built by 2040 in Quebec, or 5,000 per year, is not overly concerned.

The pandemic has made a much more important construction exercise, the economic conditions after the pandemic have hurt us like everywhere. Currently things are going well, said the mayor on Tuesday, a few hours before the municipal council meeting.

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Bruno Marchand, mayor of Quebec.

The 80,000 for 2040 is still the target and it will not change.

A quote from Bruno Marchand, mayor of Quebec

Bruno Marchand says have good hope of making up for the delay recorded in 2023. We have good figures which are catching up in the last few weeks. Our permit issuances in recent weeks are also going well. We are confident of catching up with this kind of initiative that we lost in 2023.

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