While calls for regulatory relaxations to facilitate housing construction are increasing, a new study shows that housing needs will not necessarily be better met if developers benefit from less restrictive regulations.
The study by the Institute for Socioeconomic Research and Information (IRIS) published on Monday notes record investments in the construction industry, which could in theory help to alleviate the housing crisis.
“Despite the existence of public mechanisms to regulate residential development, there has rarely been as much money circulating in the housing market as in the last twenty years,” said Louis Gaudreau, associate researcher at the IRIS and co-author of the study.
This increase in investments had repercussions on the construction of new housing, the number of which followed and even exceeded the growth in the number of households in four large cities in Quebec.
“In Montreal, for example, 434,293 housing units were built between 2001 and 2021, while the metropolis had 418,340 new households during this period,” observed Catherine Héon Cliche, associate researcher at IRIS and co-author of the study.
While the average rent in six large Quebec cities increased from 67% to 114%, companies operating in residential real estate experienced strong growth, if not relatively stable levels.
Despite the real estate boom, the housing shortage persists due to investment choices that have favored lucrative property over more accessible rental housing.
In some cities, between 54% and 69% of new housing built from 2000 to 2023 was condominiums or single-family homes, according to the study by the left-leaning Institute, which believes that further liberalizing the sector will only worsen crisis.
“The government of François Legault has adopted several legislative changes aimed at further liberalizing the residential construction sector in recent years,” noted Mr. Gaudreau.
“Our study shows that the exact opposite should have been done since better supervision of the industry and public investment in social housing would have made it possible to better meet the needs of tenants,” he added.
