Some 10,000 new rental housing units will hit the Montreal market in 2020. This is an “unmatched” record for several years, according to a new study by the Canada Mortgage and Housing Corporation (CMHC). Demand, however, is likely to decrease due to the decline in migration, a pandemic requires. As a result, the vacancy rate, which hovers around 1.5%, could increase rapidly.
“There are still a lot of unknowns, so it’s hard to predict the future precisely. That said, with the drop in migration, we can still expect it to be less complicated for a tenant to find accommodation in the coming months, “explains to Subway CMHC market analyst specialist Francis Cortellino.
The drop in new non-permanent residents arriving in Montreal between January and March is around 40%. This will have a strong impact on the market, as these people make up a large part of the demand. “Rental demand will be impacted downward,” says Cortellino. On the other hand, it will also be supported by the fact that fewer households will be able to buy property, given the very difficult economic situation. ”
“If the migratory balance drops drastically, the rental market should begin to relax. Otherwise, the Montreal vacancy rate should remain below 2%. ” -Francis Cortellino, from CMHC
He added that some “short-term” rental units could “make the leap to the long term, which will increase the number of newly offered apartments.” This growth in supply, estimated at 10,000 new units, “will ease the pressure on the rental market,” said Cortellino.
The City on guard
At the office of the mayor of Montreal, Valérie Plante, we welcome the news rather favorably, with a few caveats, however. “At first glance, it is clear that adding so many rental units could have a positive effect on the vacancy rate in Montreal,” said spokeswoman Geneviève Jutras.
“What we don’t see in these data, however, is the type of housing, and the price of rent. There are many solutions to restore balance in the rental market in our metropolis, including the development of new social, affordable and family housing, to meet the needs of the population, ”she adds.
What impacts on the ground?
For the spokesperson for the Popular Action Front in Urban Redevelopment (FRAPRU), Véronique Laflamme, the 10,000 new homes “are still projections” that need to be put into perspective. “There is no guarantee that this will solve the housing shortage given the high demand that existed before the pandemic,” she reasoned.
Laflamme adds that this will not help the situation of vulnerable families. “What is being built is mostly small dwellings. And expensive housing. New homes are not affordable. These new units do nothing to address the shortage of social housing, ”she said.
“There is an urgent need to reinvest massively there, which would help to increase housing starts. […] We must quickly build social housing in different formulas to meet the increased needs of the pandemic. ” -Véronique Laflamme, from FRAPRU
FRAPRU also argues that the uncertainty about the evolution of the vacancy rate is palpable. “CMHC says it could stay below 2%. But several factors come into play. And we still don’t know what effect it will have, ”says Laflamme.
The Corporation of Real Estate Owners of Quebec (CORPIQ), the director of public affairs, Hans Brouillette, is rather optimistic. “We are starting to see the effect of accommodation previously rented short-term to tourists. They are returning to the residential market, ”he says.
“By adding 10,000 new units planned and counting all the units that will become available due to job losses and distance university courses, it is certain that the vacancy rate will go back up to more than 2%.” -Hans Brouillette, from CORPIQ
Only problem: if the new units should find takers, “the non-renovated dwellings will become more difficult to re-let”, notes Mr. Brouillette. “In this context of a more abundant supply, the government must be careful before funding the construction of new social housing and rather prioritize direct financial assistance to the person,” he said.
Gallery: Generic images Finances (Photos)