Quebec’s housing strategy: MEI welcomes a realistic plan, but which could have more bite to curb price increases

• The new plan would increase housing starts by almost 20%, according to the Ministry’s estimates.

Montreal, August 22, 2024 – The Quebec Housing Strategy presented by Housing Minister France-Élaine Duranceau targets the correct issue by addressing the regulatory obstacles stifling the supply of housing, according to a researcher at the Montreal Economic Institute.

“The Minister has correctly singled out the role of regulation in the recent increase in housing prices,” explains Gabriel Giguère, senior policy analyst at the MEI. “While the causes are properly identified and what’s required from cities is clear, nothing is proposed to encourage cities to make the right changes.”

As noted in the Strategy, planning regulations and the administrative process involved in getting units off the ground are contributing to slowing the pace of construction.

In Montreal, for example, increases in the time required to issue building permits, the “20-20-20 tax” on the construction of new housing, and administrative decisions impeding the construction of nearly 24,000 homes have all been denounced as major obstacles to increasing the supply of housing.

However, numerous economic studies have shown that – regardless of their price – the construction of new homes helps to free up affordable housing as families move into these new units, thus leaving others vacant.

According to estimates from the Ministry of Housing, this plan will enable 560,000 new homes to be built by 2034. This represents an increase of almost 20% in the present rate of construction, which translates into 115,000 additional homes.

The researcher notes that these projections still fall short of the needs estimated by the Canada Mortgage and Housing Corporation, which puts the number of new homes Quebec requires to return to affordable price levels by 2030 at 1.2 million.

“While the Minister’s targets don’t reach the levels estimated necessary by the CMHC, they do have the merit of being realistic in terms of the availability of labour and the regulatory constraints on increasing it,” explains Mr. Giguère. “Quebec could aim even higher by taking down the walls between the various trades, but the plan proposed by Ms. Duranceau nonetheless represents a step in the right direction.”

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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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