No purchase of land for residential construction purposes has been made on the island of Montreal for two months, notes a specialist in land transactions. Such apathy does not bode well for future home additions at a time when the market is in dire need of new homes.
Zero is the number of residential lots that changed hands in April and May on the island of Montreal. Unheard of, according to the expert who compiled this data. There were five days left until the end of the month, at the time of this writing.
“Land sales occur about 18 months ahead of housing starts, to account for permitting delays,” says Simon G. Boyer, CEO of Landerz, a real estate agency that scrutinizes all land transactions in the area. Montrealer for nearly two years. Low sales today means anemic housing starts 18 months from now,” he argues.
This is very bad news for those who are looking for a home. The scarcity of supply in a context where demand is sustained has the effect of causing the price to jump. This translates into houses and condos that have become unaffordable and steep rent increases.
The Canada Mortgage and Housing Corporation (CMHC) already predicts that the average rent will increase by 30% in the Montreal area by 2025. “There is reason to wonder if the situation will not actually be worse than what is announced,” wonders Mr. Boyer today. His firm, Landerz, publishes Marketwatch every month, which lists all land purchases.
For its part, the Association of Construction and Housing Professionals of Quebec (APCHQ) expects a 40% drop in rental housing starts in Quebec this year. The province has a deficit of 100,000 homes, according to this organization.
For Boyer, if developers capitulate, the housing crisis will get worse unless policymakers choose to make bold decisions. “It is critical to provide more predictability on the development potential of sites by providing zoning in their own right. Too many projects still have to go through specific project adoption processes, often subject to the referendum process. »
The downward trend in the value of land transactions dates back a year and coincides with the rise in interest rates.
On the island of Montreal, the value of residential land transactions fell by 82% in one year. It is not much better in the Metropolitan Community of Montreal (CMM) as a whole, where the drop is 79%.
In May 2022, the value of the 3-month moving average of residential lot transactions stood at 53.5 million in the island. Last April, still according to a moving average of 3 months, we fell to 9.7 million, calculates the firm Landerz. In MWC, the equivalent numbers fell from 142.4 million to 30.3 million over the same period.
