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Demographic Trends in Montreal Favour Condominiums

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The Federation of Real Estate Boards of Quebec (FCIQ) recently published a market analysis entitled L’impact des tendances démographiques sur le marché de la revente au Québec (in French) on the likely impact of demographic trends on the Québec resale market over the next two decades.

.The report is primarily based on the demographic projections of the “Institut de la Statistique du Québec,” and takes an in-depth look at the relationship between natural growth rates, immigration rates, and residential real estate tendencies.

.To summarize the findings, the population of the province’s six CMAs should increase until 2036, with the exception of the Saguenay CMA which should start to decline in 2029. The aging of the population and reduction in average household size will favour condominiums, which suggests that new will condo starts continue to occupy an important place in large urban centres and gain ground in some smaller centres.

Population growth on a steady rise, but not due to natural increase

In the News: Demographic Trends in Montreal Favour Condominiums
In the News: Demographic Trends in Montreal Favour Condominiums

The population in the Quebec province is projected to increase from 8.0 million in 2011 to 8.4 million in 2016 and will further increase to 9.4 million in 2036. The total number of Quebecers is expected to reach 10.1 million in 2061. 

 But while the population growth appears to healthy and thriving, these numbers mainly reflect influx through immigration, and not natural growth (the difference between the number of birth and deaths). The number of new immigrants has reached a plateau of around 50,000 per year, according to the ISQ. On the other hand, natural growth rate is slowly declining, and number of deaths are expected to surpass the number of births by 2033. 

Fewer households = Fewer SFH housing starts

In the long run, a decreased growth rate in the formation of new households should result in a decrease in the number of housing starts- due to a reduced need for new housing. For the past 10 years, 45,000 housing units were started in average per year in Quebec. The average number of housing starts over the next decade is expected to decrease to around 30 000 units per year. Towards the end of the next two decades, in the year 2036 the number of housing sites in Quebec could be nearly 50% lower than the level currently observed.
 Within Quebec, the areas forecasting the most vigorous growth in demand for properties in the next 20 years are the administrative region of Montreal and its peripheral regions; Nord-du-Québec, Ottawa and the National Capital.

Immigration has a positive effect on the resale market

In the News: Demographic Trends in Montreal Favour Condominiums
In the News: Demographic Trends in Montreal Favour Condominiums
Immigration plays an important role towards the resale market in Quebec. Firstly, it is due to immigration that Quebec’s population is expected to continue growing after 2033, thereby sustaining the resale market. Montreal and Ottawa will host some nine out of ten immigrants moving to Quebec. Therefore, those regions will benefit the most from the economic boost provided by the immigration influx. 
 It’s important to note that while immigration will boost overall residential sales, the average homeownership rate for a new immigrant is lower that the average homeownership rate of the general population. In 2011, the homeownership rate for newcomers was less than 30%, while the general rate within the general populace was 55%. However, trends in the rest of Canada have shown that over time, homeownership rate for immigrants increases, as new immigrants become more established and satisfy the conditions required for obtaining a mortgage.

Immigration will favour the condominium market in particular

 Newcomers who enter the province are more likely than native Canadians to invest into the condominium market. For example, according to the CMHC, 33% of immigrant owners owned a condominium in 2011, compared to 17% of non-immigrant homeowners. In the next 20 years, the total population growth due to immigration is thus expected to boost the condominium market more than any other residential property category. 

The ‘booming baby-boomer’ segment also benefits the condo market

In the News: Demographic Trends in Montreal Favour Condominiums
In the News: Demographic Trends in Montreal Favour Condominiums
Another important conclusion that emerged from the statistical analysis of Quebec’s population was the impact of the growing +65 year old demographic.  Baby boomers are expected to increase from 18% to 26% of the overall population in 2036, while the weight of 25-64 year old group will decrease from 55% to 48% during the same period. Thus, the median age of the Quebec’s population will increase from 42 to 46 years between 2016 and 2036.

In addition, the number of households headed by people aged 75 and over will double over the next 20 years to reach 801,265 households in 2036.

With the departure of their children of the family nest, the housing needs of baby boomers are now very different from those of 30 years ago. Today, many members of this cohort are deciding to downsize from their suburban single family homes in favour of the vibrant, culturally rich lifestyle offered by the downtown areas. Condos also reduce the maintenance costs of their property and free up more time to pursue personal interests and hobbies. Thus, baby boomers now represent a significant demand for condominiums within urban centres in Quebec.

In conclusion,

There are four main take-away points regarding the impact of trends demographic on the Québec real estate market over the next 20 years.
First, the long-term trend of residential sales  is expected to remain positive in Quebec.
Secondly, immigration, will become the only population growth engine from 2034, which will have a positive impact on the resale market, since it will increase the overall pool of buyers. Specifically, immigration will favour the condominium market, since immigrants have statistically proven to be more likely than non-immigrants to buy condominiums.

Thirdly, the dynamic growth of households in the areas surrounding Montreal, Outaouais and the Capitale-Nationale as well as in the Montreal area itself, suggests stronger sales growth in the property market in these regions.

And finally, the condo should benefit more than other categories of property trends population over the next 20 years. The aging population and reduced average size of the Quebecois households suggests that the condominium market will continue to occupy an important place in the large urban centres as well as gaining ground in some smaller urban centres.

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