The housing crisis, which results in unaffordable houses, a housing shortage and out-of-control rents, will worsen in 2023, warns Desjardins Group, in a recent publication.
In two years, the monthly payment to pay the mortgage on an average house has jumped by $1,000 per month, underlined the economists Hélène Bégin and Maëlle Boulais-PRésault in the latest issue of Zoom sur l’habitation published on Thursday.
We’re talking regarding a $465,000 house with a 10% down payment and a 25-year amortization. The average monthly payment has gone from a low of $1,350 at the height of the pandemic to $2,550 these days.
“In the current environment of high mortgage rates, monthly payments are out of reach for many first-time buyers, whether or not there is financial help from those around them,” writes Desjardins.
Rents will increase by 10%
On the rental side, it is not happier, we warn. The apartment vacancy rate, currently at 1.7% across Quebec, will approach 1% in 2023. in the document.
The reasons for the imbalance are known: strong demand due to immigration, difficulty for the rising generation to access property and insufficient supply of new housing. Apartment construction, which fell by 10% in 2022, compared to 2021, will drop another 20% in 2023, compared to last year.
Desjardins only foresees 32,000 new housing units in 2023 in Quebec, whereas two years ago, nearly 47,000 were built.
Despite certain government programs, project financing has been a major challenge since the rise in interest rates. Unless there is a massive injection of public funds, an easing of regulations or more support for municipalities, the construction of rental apartments will continue to slow down rather than accelerate.
Hélène Bégin, Senior Economist at Desjardins Group
Result: rents will continue to soar. After an average increase of 8.9% last year, the increase should reach 10% in 2023, advances the financial institution.
We will have to wait until 2024 to have good news, starting with housing affordability.
Mortgage rates will eventually start to fall. Added to this will be the drop in house prices. These two factors will contribute to an improvement in affordability in 2024, analyzes the cooperative movement.
Until then, property prices will continue to slide. “The average price of properties fell by 8.1% in Quebec from the peak of April 2022 to January 2023 and the correction should reach 17% by the end of the year”, indicate the forecasters of Desjardins.
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Desjardins Group
