Shortage of 40,000 to 60,000 housing units in Quebec: construction association

MONTREAL -

To improve accessibility to the real estate market, it would be necessary to build more dwellings in Quebec, pleads the Association of the professionals of construction and housing of Quebec (APCHQ).

APCHQ economic service director Paul Cardinal said there is a shortage of between 40,000 and 60,000 dwellings in Quebec.

"We have underbuilt in recent years," he said. "Governments have acted a lot on the demand side, but the problem, more and more experts realize, is a supply problem."

The COVID-19 pandemic has made the housing affordability crisis worse. The number of homes for sale relative to demand is at a low point.

At the same time, the average price of properties rose by 32.6 per cent in April 2021, according to an APCHQ report published Thursday.

Already battered, housing affordability has deteriorated rapidly in recent months, according to a report by National Bank economists Kyle Dahms and Alexandre Ducharme, published in August.

In the second quarter, their housing affordability indicator for Canada deteriorated at its fastest pace since 1994.

The solution is more supply, which means more construction, according to Cardinal. To speed up construction, he believes municipalities should ease the regulatory burden on building.

"It can take a long time to get all the approvals for a real estate project to see the light of day," he said. "And we're not talking months, we're talking years in many municipalities."

Some municipalities have developed a one-stop-shop system for building contractors so that they don't get lost in an administrative maze. Cardinal said this kind of reorganization can facilitate the construction of new housing.

"We're not anti-regulation, but we just want to get it done a little faster," he said.

The taxes and fees associated with the purchase of a new home also make new construction relatively more expensive than existing homes.

The APCHQ is inviting Quebec and Ottawa to reimburse "a substantial part" of the federal (GST) and provincial (QST) sales taxes on the purchase of a new home.

This measure could be modulated according to certain conditions such as the price of the property or the fact that it is a first-time buyer.

THE DENSIFICATION QUESTION

"Zoning regulations are an important factor in the current housing crisis," says Jean-Philippe Meloche, a professor at the School of Urban Planning and Landscape Architecture at the Université de Montréal.

In the United States, there are several studies that tend to show that the more stringent the regulations in an urban area, the faster the price of houses will rise.

"Zoning regulations that prevent the construction of high-density housing in urban municipalities are very harmful," he said. "And that's a regulation that is super common."

"Under the pretext of preserving the quality of life and the tranquillity of the residents of certain neighbourhoods, cities prevent the densification of the territory and many households from settling there," he said.

However, he added, it is possible to build highly densified housing in neighborhoods where the quality of life is attractive.

Meloche used Westmount, the most affluent city in Quebec, as an example.

"It's true that these are rich people's houses, but the municipality is densified. It shows that you can make attractive homes in a densified space for the middle class," he said.

THE ELECTION ISSUE

Housing affordability has become a key election issue with 57 per cent of Canadians aged 18 to 34 saying that a candidate's stance on addressing housing affordability will influence their vote, according to a Royal LePage poll.

While there are promises to increase supply, Cardinal says he is disappointed with the major parties' commitments so far, although he notes that the New Democratic Party (NDP) is proposing GST relief on the sale of new homes.

Once again, the parties are still very demand-driven, he said, and there are not a lot of promises to stimulate supply.

Accelerating housing construction, however, is a complex issue, adds Meloche.

"It's not an obvious issue. It's very complex. There are a lot of variables at play: the unemployment rate, competition in the market. A lot of variables where you could try to intervene, but the question eventually is how to get developers to want to build more houses." he said.

-- This report by The Canadian Press was first published in French on Sept. 2, 2021.