The housing shortage in Montreal has little to do with the regulatory burden decried by the construction industry. It is rather explained by increasing costs, and above all by the “investment choices” of promoters in a flourishing industry.
Published at 12:58 a.m.
Updated at 7:00 a.m.
The quantity of new housing has even increased faster than the number of households in the last 20 years, notes the Institute for Socioeconomic Research and Information (IRIS) in its note “The big winners of the housing crisis”.
In Montreal, the industry built 434,293 new housing units between 2001 and 2021. During this time, the metropolis welcomed 418,340 new households, notes the study. The trend is the same in the five other agglomerations of Quebec analyzed, except Sherbrooke and Saguenay.
The statistic is of course only valid for new housing and does not say whether new construction is able to replace homes that have disappeared from the market due to their obsolescence.
For IRIS, the figures still demonstrate that the construction industry is doing very well, despite the regulatory constraints imposed by cities.
The new bill from Housing Minister France-Élaine Duranceau, which will allow municipalities to ignore their urban planning rules to authorize projects, will not solve the problem, the researchers conclude.
“In light of the long-term picture, the regulatory framework does not seem to have prevented investment at historic levels,” says Louis Gaudreau, author of the IRIS study with Catherine Héon Cliche.
A question of choice
The researchers nevertheless recognize that we must “build more housing, and more quickly, to respond to the housing crisis”. According to them, the low vacancy rates can, however, be explained by “investment choices” favoring “profitable property”, to the detriment of affordable rental housing.
From 2000 to 2023 in Montreal, Gatineau and Saguenay, more than two thirds of the housing built were single-family homes and condos intended for owner-occupiers, underlines IRIS.
Conversely, less than 3% of new homes in the metropolis were financed by AccèsLogis, the main program dedicated to the construction of social housing.
IRIS adds that the industry does not have profitability problems that would prevent it from building enough.
Since 2012, large rental companies have seen their annual profits jump by 45.7%, reaching 4.78 billion in 2021. As for rental income from individuals, they doubled between 2000 and 2022, to 17.8 billion .
“Guide investments”
“That doesn’t mean that we shouldn’t invest more to cope with the increase in population,” says Louis Gaudreau. But it is important to direct investments towards the sectors of the market where there are the greatest needs. »
This is where the market and governments have failed so far, he says.
“We only have to look at the resistance that Montreal’s 20-20-20 policy has generated,” illustrates the researcher. It was to require developers to build approximately 20% social housing, 20% affordable housing and 20% family housing.
However, the developers preferred to pay compensation to the City instead of including cheaper housing in their projects.
It’s complicated for entrepreneurs, it fits poorly into their business model… There doesn’t seem to be much appetite from the private sector. So, I think we are faced with a situation where the only solution lies in public investment.
Louis Gaudreau, author of the study, on the construction of cheaper housing by the private sector
Professor at the School of Urban Planning and Landscape Architecture at the University of Montreal, Jean-Philippe Meloche agrees on this point.
“If we are in a tight market, it is certain that we must protect the most vulnerable, and it would be in our interest to have public policies in this sense,” he says.
The professor also believes that regulations are not the main factor responsible for the low rental vacancy rate and the decline in residential construction in the last year. “But that partly explains it,” he said.
If entrepreneurs take longer to build a house, a young couple will stay longer in their apartment, illustrates Jean-Philippe Meloche. “Is it because we haven’t built enough rental housing that the market is tight, or is it because we haven’t built enough houses? Both, in fact. »
The professor mentions a 2023 Canada Mortgage and Housing Corporation study, which demonstrates a correlation between heavy regulations and housing unaffordability in large cities.
At the Association of Housing Construction Professionals of Quebec (APCHQ), CEO Maxime Rodrigue believes for his part that the IRIS study provides an “essential perspective to respond to the crisis”.
While seriously underestimating the impact of municipal red tape.
“IRIS wants more social and affordable housing, but positions itself against deregulation,” he wrote in a statement sent to The Press. However, social and affordable housing are often multi-unit complexes, which require exemptions from planning regulations. »
It is difficult, according to him, to demand more affordable housing while opposing deregulation.
At IRIS, Louis Gaudreau specifies that his study “does not say that regulations are necessarily effective and are not a hindrance”. “On the other hand, until now, it does not seem to be the main factor in the housing crisis. »
Learn more
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- 100%
- Increase in average rent in Montreal between 2000 and 2022
Source: Statistics Canada
- 26.4 billion
- Average investment, in dollars, in residential construction in Canada, from 2010 to 2020
Source: The big winners of the housing crisis, IRIS
