Opinion: How to stop the slide in housing affordability in Quebec

There is still time to get ahead of this issue and avoid the dire circumstances Canadians face in other parts of the country.

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It’s easy to take things for granted until they’re gone. In Quebec, this applies to the housing affordability many communities have enjoyed for decades.

Of course, some Quebecers will argue that housing has been unaffordable for a long time. But the cost of owning or renting housing is cheaper in Quebec than in many other parts of Canada. According to the latest census, shelter-related costs (on average) for renter households (including rents, heating and other fees) in Quebec are 37 per cent cheaper than in Ontario and 41 per cent cheaper than in British Columbia. Shelter costs for Quebec homeowners are 30 per cent cheaper than in Ontario and 28 per cent cheaper than in B.C.

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In both cases, the gap is far greater than any differences in incomes, meaning other factors are at play.

Housing costs, like other costs, are determined by the interaction of demand and supply. The greater the gap between the number of people searching for housing and the number of homes available to buy or rent, the greater the cost of buying or renting.

A new study published by the Fraser Institute compares annual population growth with annual housing completions (the number of new homes built) between 1972 and 2022, the latest period of available data. Throughout the entire period, Canada’s population grew by 1.9 people (on average) every year for every home built. But today, while housing completions remain at or below levels from previous decades, population growth has reached new highs with the ratio reaching an all-time high of 4.7 people per-home built in 2022.

In other words, the gap between the number of homes needed and the number built across Canada has never been so wide.

Among the provinces, Quebec has the lowest ratio of population growth to housing completions in 2022 (2.8 people for every home built) due to Quebec’s ability to match population growth with homebuilding over most of this period. From 1972 to 2015, Quebec grew by 46,379 people per year (on average) and built 42,716 homes per year. This close relationship is remarkable, as no other growing province has achieved similar balance between demand and supply in recent decades.

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But in the seven years since 2015, average population growth in Quebec has ballooned to 84,847 people per year while homebuilding remains virtually unchanged (45,933 per year). This does not bode well for Quebec’s place as a relatively affordable province.

Ontario reached an imbalance roughly equivalent to Quebec’s current gap in 2016, and the gap has grown every year since (barring the height of COVID). The result? Historically high housing costs, with all their negative side-effects: Workers and students find it difficult to move for better paying jobs or to study. Young families are unable to find suitable housing with enough room. Seniors are unable to downsize. Employers can’t find talent. This is the reality across a growing number of Canadian communities.

Politicians at all levels of government have taken notice and are scrambling to find solutions. For example, the Trudeau government recently announced income tax tweaks designed to discourage short-term rentals, while the Legault government has partnered with Ottawa to create a fund aimed at accelerating housing approvals. But a lot more is required to close the growing supply-demand gap.

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At a time when homebuilders face increased materials and financing costs, any requirements and fees municipalities levy on homes must be revisited, otherwise much-needed housing supply will be held up. Similarly, the provincial and federal governments would be wise to better account for homebuilding trends when determining the rate and composition of population growth, notably through their short- and medium-term immigration plans. As the housing stock grows, so too can the number of current and future Quebecers who are adequately housed.

Luckily for Quebecers, there’s still time to get ahead of this issue and avoid the dire circumstances Canadians face in other parts of the country. But time is quickly running out.

Josef Filipowicz is a senior fellow at the Fraser Institute.

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