Press review of early January

Two themes are the focus of this new year's press review: rising house prices and the factors that contribute to them, including rising insurance premiums and property taxes imposed on homeowners by some municipalities, and a brief overview of the economy and real estate.

By Corinne Laberge

 

Rising rents and special municipal taxation for 2023

The year has just begun and already rent increases are on the agenda. "With galloping inflation and the increase in insurance premiums and municipal taxes, tenants can expect more significant rent increases in 2023," says this TVA Nouvelles text. According to CORPIQ, "the average projected increase for the next year varies between 3% and 4%," it says.

The impact of the increase in insurance premiums for homeowners is significant. "Annual increases in recent years for certain types of buildings have ranged from 10% to 35%," the Journal de Montréal points out. "It's a real headache for all rental landlords," says CORPIQ's director of public affairs, Marc-André Plante. He considers it "unfortunate" that this contributes to the increase in rents, since the Tribunal administrative du logement recognizes 100% of insurance premium increases in the annual rent increase calculations. 

On the other hand, this article published last month in Le Devoir sums up the situation surrounding the special taxation planned in some municipalities. "A growing number of cities in the greater Montreal area are imposing higher property taxes on residential buildings with six or more units (...) And some municipalities will be charging several thousand dollars next year (2023) for the construction of each new unit on their territory. These measures could harm tenants and discourage the development of high density buildings.”

We learn that this fee "will reach $5,000 per door in Terrebonne". Mascouche is also considering it. "Additionally, the last Mascouche budget introduced a special property tax on all residential property owners of $0.01 per $100 of the value on the current assessment roll.”

The Association des professionnels de la construction et de l'habitation du Québec (APCHQ) is concerned about the effects of these measures on housing starts. "It is certain that this does not help the affordability of new housing, and the timing does not seem good to us either, because we should accelerate the construction of residential housing, and now, we have just added delays for the promoters ", argues its director of the economic service, Paul Cardinal, in conclusion of the article. 

Finally, the opinion piece "Il manque d'habitations, point à la ligne", signed by Mario Dumont in Le Journal de Montréal, is worth the read. 

The economy and real estate

Unveiling its 2022-2023 forecasts for the residential construction and renovation sector in Quebec, "the APCHQ anticipates 46,000 new housing starts, a 21% drop compared to 2022, the largest drop in this area in Quebec since 1995," reports La Presse. For 2022, "Quebec is heading towards a 14% drop in new housing starts, to 58,000 units," while in 2021, "nearly 68,000 dwellings were built," it says.

Paul Cardinal explains that "the rapid rise in interest rates in recent months will have a noticeable negative effect on the number of housing starts and spending on residential renovation next year.”

CORPIQ points out that due to "low vacancy rates in several regional cities, the imbalance between supply and demand is likely to worsen.” The director of public affairs, Marc-André Plante, observes that "the 15% decline in renovation is a very worrying factor. With nearly 60% of the rental stock built before 1980, the drop in renovation spending will have a direct impact on the quality and overall maintenance of housing.”

Rental construction will slow down considerably in 2023, by -32% according to this APCHQ report. One reads "that no region will be spared by the downward movement of new housing starts, the decreases going from 15% for the Saguenay region to 25% for the Sherbrooke region."

The following article in Le Devoir deals with delays in the delivery of real estate projects. "Promoters must better adapt to the numerous delays that construction sites are currently experiencing," notes the Association de la construction du Québec (ACQ). Its public affairs officer, Guillaume Houle, maintains that "it is up to everyone to protect themselves (...) and thus prevent new occupants from moving into dwellings that are not really ready to welcome them".  

Marc-André Plante of CORPIQ is also quoted: "there is a shortage of 100,000 housing units on the market (...) There is enormous pressure to deliver housing units in Quebec in order to meet the growing demand.”

In conclusion, at the end of December, La Presse proposed the article "Surprise, votre pouvoir d'achat augmente!” Based on data from a study conducted by the University of Sherbrooke's Chair in Taxation and Public Finance among 14 types of Quebec households, the article reported that "for 11 of them, purchasing power has actually increased in recent years, despite inflation.