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Low and stable interest rates constitute a solid base of a sustained development

Low and stable interest rates constitute a solid base of a sustained development

According to the APCHQ, low and stable interest rates constitute a solid base, which should ensure the market of residential construction a sustained development, and this, in spite of certain signs of exhaustion.

On a provincial scale, the APCHQ envisages 47.300 operational start-ups in 2011 and 45.600 in 2012. “In 2010, the performance of the industry has surprised many,” affirms François Bernier, director of the Economic Service and Public Affairs of the APCHQ. As several fundamental factors remain favourable, we retain an optimistic scenario for 2011 and 2012.”

The growth promoters

Among the elements which justify this forecast, the APCHQ underlines the following facts: the arrival on the market of new young households, of which the average number will be higher than 40.000 per year between now and 2015 according to the Institut de la statistique du Québec (ISQ); the inventories of new dwellings, of which the flow is carried out in a very suitable way (within a five-month deadline, according to the latest data); the employment levels which continue to make progress and with unemployment dropping; as well as the financial standing of the governments, which seems under control, which avoids a non-envisaged increase in the tax burden.

Raise of the QST and affordability

The APCHQ mentions however that the following elements are less encouraging: the rise of the QST in January 2012, the first signs of deceleration in the sales of existing houses as well as the progressive reduction in affordability, consequence of the fast increase in the prices during the last decade.

Regarded for a long time as one of the most affordable in Canada, the Quebec housing market is compared indeed, more and more so, to what one finds in other provinces, which is confirmed by the reports of great financial institutions, in particular those of the Royal Bank of Canada and Desjardins. “During the last decade, the scarcity of the lots of land and a constant demand contributed to a doubling of the prices, and even more, in various markets of Quebec, affirms Mr. Bernier. Now, more than ever, the elements which are likely to affect the affordability - of which a change of the interest rates and the various governmental policies - could have important repercussions in the industry. ”

Co-ownership more popular than the one-family house

In 2012, co-ownership in the centres of 10.000 inhabitants and more will reach approximately 12.000 units, that is to say a 1.000 more than that of the one-family houses. It is the concrete demonstration of a heavy tendency of the market, according to APCHQ.

Semi-detached and row houses will occupy a significant part of the market, with 7.000 units, that is to say as much as what will be produced in the rental multi-familial field. It should however be stressed that the relative importance of this last sector is explained mainly by the production of residences for elderly people. In fact, the traditional rental sector remains lethargic. “The development of rental multi-family residences not being very profitable, the quasi-shortage of this type of residences has few chances to reabsorb itself”, underlines Mr. Bernier.

Growth of 5% of the renovation market

For several years, expenditures in restoration, including those that touch maintenance and repairs, have exceeded the expenditure devoted to the new house. One observes an annual rhythm of increase of 5% to 9%, depending on the years. In this growing industry, 36% of the households affirm to have their work carried out by a contractor, which necessarily results in an increase in the sales turnover of the renovation companies. Taking into account the increase in the QST, which exerts a negative effect on the market, the APCHQ estimates that the growth will be in the lower part of the curve, and that it will be 5% per year in 2011 and 2012. According to last evaluations, the average value of the renovation contracts was 10.590 $.

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Québec Landlords Association (1)

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