Economic Information CentreEconomic Information Centre

INVESTMENTS IN THE QUÉBEC CITY METROPOLITAN REGION FOR THE FIRST QUARTER 2010

The construction sector is a key element in the economic performance of the Quebec City CMA, as demonstrated once again in the first quarter of 2010.Work began on several major projects, thereby contributing to a 35.1% increase in the value of building permits issued, compared with the same period in 2009, reaching $491.6 million. This was a first-quarter record for the Quebec City CMA, topping the $400.4 million recorded in 2008. This new record also significantly exceeded the figures recorded at the end of the 1991 and 1996 recessions. (The region recorded an increase of 9.6% in the first quarter of 1992 and a decrease of 23.2% in the first quarter of 1997.)

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The residential sector was dominant in the first quarter of 2010, with a 62.7% increase in the value of building permits issued, compared with the same period in 2009. The number of properties for sale and apartments for rent is still tight, leading to the launch of new residential projects at the beginning of the year. According to the SCHL, the Quebec City region's housing stock grew by 1,125 units between January and March, compared to 491 last year. The number of housing starts for semi-detached homes, row houses and condominiums more than doubled, while that for rental housing grew nearly sixfold. Demand for new properties also held steady in the Quebec City CMA in the second quarter, with housing starts up 23.4 % year-over-year.Overall, 2010 will be a good year for new construction in the region. However, a number of households decided to move up their property purchases to the beginning of the year to take advantage of exceptionally low mortgage rates. A gradual increase in rates could slow residential activity somewhat.

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The non-residential sector recorded an 11.1% decline in the value of building permits issued in the first quarter of 2010 compared with the same period last year. However, the sector remained very active early in the year. Preparations have already begun on new office building projects. Commercial space was added as the manufacturing sector showed signs of recovery. The non-residential sector's dynamic performance is expected to continue across the region. The low vacancy rate (4.8% in the first quarter of 2010) will be conducive to the construction of new office buildings, while the manufacturing sector will require additional investments to remain competitive. In addition, the residential sector's momentum will favour the expansion of the commercial sector. However, certain constraints could temper the pace of growth in capital expenditures. For example, many temporary government measures aimed at stimulating private investments are about to end or have already been discontinued. In addition, uncertainties remain with respect to the strength of the economic recovery.

 
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LouisGagnonSenior Economist

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