MONTREAL, QUEBEC-- According to the latest forecasts conducted by Canada Mortgage and Housing Corporation (CMHC), a recovering economy, favorable borrowing conditions, and strong migratory flows will fuel Quebec's housing markets this year.
"Since the second half of 2009, the impact of improving global and national economic environments was already apparent in all sectors of Quebec's economy. In addition to public spending on infrastructure projects, both household spending and private investment have started to grow, while exports have reacted positively to increased global demand. As a result, economic growth is expected to be 3.1 per cent in 2010 and 2.6 per cent in 2011," explained Kevin Hughes, Regional Economist at CMHC.
A variety of demographic factors will also sustain the province's housing markets in the coming years. Growing net migration to the province will continue to have a positive impact on the rental and resale markets. In addition, population ageing and the recent increase in the birth rate will likely prompt households to adjust their housing needs.
In Detail
Single Starts: Recently, starts of single detached homes have benefited significantly from the improved economic and financial environment as well as from the reduced supply of such homes on the resale market. However, the easing of the resale market, combined with a trend toward more affordable housing, will take pressure off of new construction going forward. About 19,525 single detached starts are expected in 2010
Multiple Starts: Two factors will dampen starts of multiple family homes in 2011: the current high level of inventory, which will remain relatively high, and the lower growth rate of the population aged 75 and over, which will limit demand for retirement homes. Nonetheless, given the strong pace at the outset of the year multiple starts will rise above the 29,000 unit mark in 2010, moving down to under 25,000 in 2011.
Resales: Following a strong recovery in 2009, which was extended into the first quarter of 2010, MLS® sales will moderate during the remainder of this year. Sales of existing condominiums (town houses or apartments) will again be an important component of the total. The Multiple Listing Service (MLS®) will record 81,800 unit sales this year, while 2011 will see approximately 81,100 unit sales.
Prices: Decreasing demand for resale homes, combined with rising supply, will take pressure off prices over the course of the next two years. With a return to more balanced conditions, price growth in the resale market will moderate over the course of 2010 to $238,900. By 2011, price growth will be more in line with inflation to about $242,000.
Mortgage Rates: Posted mortgage rates will gradually increase in the second half of 2010 and in 2011. For 2010, the one-year posted mortgage rate is assumed to be in the 3.4 to 4.5 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.0 to 6.5 per cent range. For 2011, the one-year posted mortgage rate is assumed be in the 4.5 to 6.0 per cent range, while three and five-year posted mortgage rates are forecast to be in the 5.0 to 7.5 per cent range.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
Source: CMHC
"Since the second half of 2009, the impact of improving global and national economic environments was already apparent in all sectors of Quebec's economy. In addition to public spending on infrastructure projects, both household spending and private investment have started to grow, while exports have reacted positively to increased global demand. As a result, economic growth is expected to be 3.1 per cent in 2010 and 2.6 per cent in 2011," explained Kevin Hughes, Regional Economist at CMHC.
A variety of demographic factors will also sustain the province's housing markets in the coming years. Growing net migration to the province will continue to have a positive impact on the rental and resale markets. In addition, population ageing and the recent increase in the birth rate will likely prompt households to adjust their housing needs.
In Detail
Single Starts: Recently, starts of single detached homes have benefited significantly from the improved economic and financial environment as well as from the reduced supply of such homes on the resale market. However, the easing of the resale market, combined with a trend toward more affordable housing, will take pressure off of new construction going forward. About 19,525 single detached starts are expected in 2010
Multiple Starts: Two factors will dampen starts of multiple family homes in 2011: the current high level of inventory, which will remain relatively high, and the lower growth rate of the population aged 75 and over, which will limit demand for retirement homes. Nonetheless, given the strong pace at the outset of the year multiple starts will rise above the 29,000 unit mark in 2010, moving down to under 25,000 in 2011.
Resales: Following a strong recovery in 2009, which was extended into the first quarter of 2010, MLS® sales will moderate during the remainder of this year. Sales of existing condominiums (town houses or apartments) will again be an important component of the total. The Multiple Listing Service (MLS®) will record 81,800 unit sales this year, while 2011 will see approximately 81,100 unit sales.
Prices: Decreasing demand for resale homes, combined with rising supply, will take pressure off prices over the course of the next two years. With a return to more balanced conditions, price growth in the resale market will moderate over the course of 2010 to $238,900. By 2011, price growth will be more in line with inflation to about $242,000.
Mortgage Rates: Posted mortgage rates will gradually increase in the second half of 2010 and in 2011. For 2010, the one-year posted mortgage rate is assumed to be in the 3.4 to 4.5 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.0 to 6.5 per cent range. For 2011, the one-year posted mortgage rate is assumed be in the 4.5 to 6.0 per cent range, while three and five-year posted mortgage rates are forecast to be in the 5.0 to 7.5 per cent range.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
Source: CMHC
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