Soaring house prices could lead to a drop in new constructions, predicts the APCHQ
Soaring housing prices could damper the number of residential construction projects next year, according to the Association des professionnels de la construction et de l'habitation du Québec (APCHQ).
The association says it anticipates 56,000 new housing projects in Quebec next year -- a drop of 18 per cent compared to the 68,300 projects expected by the end of 2021.
If true, this would mark the first decline in the residential construction sector in seven years.
"The main problem is affordability, which has deteriorated at a rapid pace," explains Paul Cardinal, director of the APCHQ's economic department.
In April, the price of existing properties jumped by 32.6 per cent over one year; that number is closer to 15 per cent as of July.
The rise in interest rates could also affect the affordability of the real estate market, according to Cardinal as mortgage rates could rise by 50 basis points in 2022.
Renovations are also expected to see a decline next year.
In 2021, Quebecers spent $18.5 billion on their renovation projects, a 25 per cent jump from 2020.
Cardinal says he expects renovation spending to reach $17 billion in 2022, an eight per cent decline.
He identifies three factors to explain this: resumed leisure and travel spending, rising interest rates and growing prices for building materials.
"People are going to go back to their usual pace of consumption and we think there's going to be less money going toward renovations," Cardinal said.
Despite the downward trend, the situation will be far from critical for contractors, Cardinal notes.
"I'm not saying they're going to welcome this as good news, but they are very busy. They've got very full order books," he said. "Sometimes they have to say, 'Yes, but I'm going to go in three months or six months.' They're also having a hard time retaining and recruiting labour."
Residential construction and the renovation sector experienced a record year in 2021.
The last time numbers were this high was in 1987 when 74,179 new units were built.
Nevertheless, Cardinal estimates there is a shortfall of between 40,000 and 60,000 units in Quebec.
"We could not catch up in the short term, because contractors are facing difficulties when it comes to the availability of materials and manpower."
In September, the APCHQ stressed that not enough housing was being built in recent years, adding an increase in supply is the best way to improve affordability.
It is proposing that municipalities review their regulations to allow more new houses to be built.
The APCHQ is also 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 for a first-time buyer.
-- This report by The Canadian Press was first published in French on Nov. 24, 2021.
CTVNews.ca Top Stories
Serial sexual offender linked to unsolved 1970s homicides of four Calgary girls, women
An investigation into unsolved historical homicides from the 1970s has linked the deaths of two girls and two young women in and around Calgary to a now-deceased serial offender.
Woman with liver failure rejected for a transplant after medical review highlights alcohol use
For nearly three months, Amanda Huska has been in an Ontario hospital, part of it on life support, because of severe liver failure. Her history of alcohol use is getting in the way of her only potential treatment: a liver transplant.
BREAKING Craig Berube named as next head coach of Toronto Maple Leafs
The Toronto Maple Leafs have named Craig Berube as their new head coach.
A look back at Alberta's record-breaking wildfire season
By the end of the 2023 wildfire season in Alberta, 1,088 wildfires had burned more than 2.2 million hectares of land, and this year, the wildfire season is already in full swing.
Person charged in random assault on actor Steve Buscemi in New York
A person wanted in connection with the random assault on actor Steve Buscemi on a New York City street earlier this month was taken into custody Friday, police said.
B.C. man 'attacked suddenly' by adult grizzly near Alberta boundary: RCMP
A B.C. man is recovering from multiple injuries after he was "attacked suddenly" by an adult grizzly bear near Elkford Thursday afternoon.
Australia's richest woman seeks removal of her portrait from exhibition
Art is subjective. And while many artists long to share their work with the world, there's no guarantee that the audience will understand it, or even like it.
Video appears to show Sean 'Diddy' Combs beating singer Cassie in hotel hallway in 2016
Security video aired by CNN appears to show Sean 'Diddy' Combs physically assaulting singer Cassie in a Los Angeles hotel hallway in 2016.
Anglers reel in 3.5-metre-long tiger shark off coast of Florida: 'She found my bait'
A group of fishers said it took roughly 20 minutes to reel in this 3.5-metre-long tiger shark off the coast of Florida.