Profile of the housing market, Québec City CMA
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Vacancy rate for the Québec City CMA
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The 2016 residential assessment of the Québec City CMA was consistent with our expectations. Construction starts continued to decline and home resales increased somewhat. Factors keeping potential buyers interested remain numerous, including the favourable economic climate, demographic growth and favourable access to credit. However, new construction projects and selling times are gradually adjusting to fall in line with the growing number of new and existing properties for sale.
In 2016, the housing stock in the CMA grew by 4,766 new units, a 12.4% decrease from the 5,442 new units built in 2015. This decrease occurred due to the apartment market: 3,227 new units became available, an annual decrease of 12.4%. The region approached a more sustainable level after many large projects were launched in 2015, particularly in the Basse-Ville, des Rivières, Sainte-Foy and Saint-Augustin areas. While construction starts are continuing to slow in Québec City, they are doing so gradually. For instance, 873 individual properties and 666 duplexes and townhouses were built in 2016, leading to average annual increases of 5.7% and 44.5%, respectively. The Val-Bélair, L’Ancienne-Lorette, Haute-St-Charles and Lévis areas were particularly active in these market sectors last year.
Finally, the number of major projects in the Québec City CMA suggests that construction starts will stay around the 4,000-unit mark in 2017. Between 2018 and 2021, they should hover between 3,000 and 3,600 units. We have noted around 100 current and future projects for this period, with a total value of nearly $2B. The number of new buildings will continue to be paired with sustained demand, which will be generated by the creation of households, increased income and demographic changes (immigration, ageing population, etc.). It will also take into account the number of available new and existing units. For that reason, the rental vacancy rate (4.9% in 2016) is increasing, approaching levels seen at the end of the 1990s. For condominiums, the high vacancy rate (4.8%) last year indicates that caution is required, even though fewer than 300 units remained unsold last year—a marked contrast to 2012’s record 1,030 units. Retirement homes are becoming more popular. This is reflected in their decreasing vacancy rate, which was 4.6% in 2016. As for individual housing, duplexes and townhouses, potential buyers are feeling less pressured to make a decision. The availability of new, unsold units and increase in new units gives them plenty of time and options.
The resale market also grew for a third consecutive year in 2016. The Québec City metropolitan area registered 6,721 transactions, 1.5% more than in 2015. Of these, 4,725 were single-family homes (+2.3%) and 521 were plexes (+6.5%). Sustained demand in these markets helped to counteract the 3% decrease in condominium sales, which reached 1,468 units. The median price of transactions remained relatively stable, increasing only slightly. Last year, a single-family home sold for around $248,000, a 1% increase. The median price of a plex was $306,000, an increase of 7%. The condominium market experienced a 4% drop in prices compared to 2015, falling to $190,000.
Over the next five years, the resale market is expected to remain above the 6,000 units/year mark. Many factors in the residential construction market will drive the resale of existing properties. The increase in availability will keep price increases at around 1% per year. This will avoid overburdening households with mortgages.