According to the latEst forecast from the Canadian Mortgage and Housing Corporation (CMHC), Quebec should register 40 000 new residential housing starts in 2009, and it expects 41 000 of them in 2010. For the current year, the Quebec market should thus know a slowdown of new housing starts, since the economic situation is less favourable.
« Although the market is favourable to buyers, the number of new housing starts will slow down to 40 000, in 2009, whereas sales of existing housing should also diminish and would figure around 70 000», mentions Kevin Hughes, the principal economist for Quebec at the CMHC.
One can expect, considering the high degree of present economic uncertainty, and the weakening job market, that limited household spending will occur in the short term. Private investment will be less abundant when export expectations continue to get gloomier, taking into account receding external demand emanating from other regions in Canada and abroad.
The CMHC specifies: « Governments have, however, responded by considerably increasing their expenses on infrastructure and by putting into practice budgetary and monetary stimulus plans. Nevertheless, the Quebec economy will recede by 2 %, in 2009, and employment will essentially do likewise, i.e. it will recede by some 1,9 %. In 2010, one will see in Quebec an economic expansion of some 1,4 %, and the job market will also begin its recovery ».
« The evolution of demographic trends affects the Quebec housing market. The constant increase of the migratory balance will stimulate local demand, whereas an aging population will engender a movement of the elderly to life in an apartment. These trends will continue, but only in the short term, as their progress should slow down », Kevin Hughes adds to that.
In detail, new individual housing starts will be more affected by the economic and financial situation. Buyers will turn more and more to the resale market because of its lower price rates. Buyers will also prefer semi-detached housing, row houses, and less expensive habitations than the one-family ones. On the other hand, foundations of new dwellings should reach 16 600 in 2009 and 10 000 in 2010.
In the collective housing component, new housing starts should reach new records this year and next year. The growth of the population aged 75 and more will be more moderate, the number of collective new housing starts will slow down to 23 400 for the current year, with a very slim increase in 2010.
The CMHC reminds us that sales of existing apartments will diminish in 2009 even if they will remain relatively abundant. Demand for condos (row houses and apartments, even if it should diminish, will remain important though. One should register 70 000 transactions in 2009, according to the figures issued by the Service inter agences (SIA), and 77 000 in 2010.
Pressure on prices should diminish with weakening sales and increasing stocks. It is very improbable that prices should increase in the course of 2009, when demand will be less strong.