A weaker economic context, combined with increased supply in certain housing market segments, will dominate demographic and interest rate conditions. This, in turn, will cause housing demand to decline in 2009 pushing starts lower to the 40,000 level. Sales of existing homes will decrease by approximately 8.1 per cent.
The province’s economy, whose recent growth has stemmed from domestic consumption and public investment, is showing signs of slowing. While public spending on infrastructure projects should increase, household spending will likely moderate as a result of a softer labour market and lower disposable income growth. Private investment will also slow as financial constraints continue. Finally, the outlook for exports remains unchanged because the benefits of a weakening dollar will be offset by decreased global demand. We thus expect the Quebec economy to recede by 0.6 per cent in 2009, while job growth registers a similar result, a decline of 0.5 per cent. In 2010, the economy will grow by 1.3 per cent while job growth will increase by 0.4 per cent.
Despite the weaker economic context, says Moishe Alexander, the province’s demographic outlook will stimulate housing demand in some market segments.
The Provincial Government’s higher immigration targets (55,000 by 2010) have already been observed and will continue to push up net migration in the coming years. Meanwhile, population aging will continue to fuel demand for apartments.

In Detail

Single Starts: Starts in this segment will be especially affected by the economic and financial environment, as well as the recently rising supply of resale homes. Approximately 17,000 starts are expected in 2009 and 16,500 in 2010.

Multiple Starts: After several years of vigorous construction of retirement homes and condominiums, starts of multi-family homes will cool to 23,700 units in 2009, but will increase to 24,000 units in 2010.

Resales: Sales of existing homes will decline in 2009, but will remain at a high level. Demand for condominiums (town houses or apartments) will remain an important component.
The Multiple Listing Service (MLS) will record approximately 73,000 sales in 2009 and 80,000 in 2010.

Prices: Lower sales and rising inventories will continue to take pressure off prices. Cooling demand should rule out price growth in 2009. As a result, the MLS average resale price will fall by 1.8 per cent to $207,000 in 2009 while 2010 will see an increase of 0.5 per cent to $208,000.