Mr. Chair, thank you for welcoming us to the Standing Committee on Finance as part of your study on government policy decisions and market forces that have led to increases in the cost of buying or renting a home in Canada.
The Association des professionnels de la construction et de l'habitation du Québec, or APCHQ, is a private, non-profit organization that brings together more than 20,000 housing and construction businesses in 13 regional associations.
The APCHQ has specialized in housing and renovation, and since 1995 it has been the employer representative that negotiates collective agreements on behalf of 16,000 employers in the residential sector.
Our mission is to be a unifying agent of change for the benefit of Quebec society by representing and supporting professionals in the residential construction and renovation industry.
Through their residential construction and renovation activities, APCHQ's 20,000 members provide homes for Quebeckers and support the social and economic development of Quebec. Our industry generates an economic impact of $45.6 billion and provides 270,000 direct and indirect jobs.
More specifically, 70% of our members work in the renovation sector and 30% in new construction. Lastly, our members work mainly in the residential sector.
The housing market has been in serious disequilibrium since the 2000s. The resale sector is systematically a seller's market, and home prices have quadrupled. Affordability is now at its lowest level in the last three decades.
Home ownership is in decline in Quebec. Quebec now lags behind the rest of Canada for the first time in its history, and young people are the ones suffering from it most. The home ownership rate is 59.9% in Quebec, compared to 66.5% for Canada as a whole.
We are therefore collectively creating the first generation that will not be owners. Given the impact that access to ownership has on household wealth, this is a major concern.
Furthermore, the rental vacancy rate has now fallen below the equilibrium level of 3% across the province, having declined from 2.5% in 2000 to 1.7% in 2022. In the absence of supply, this puts strong upward pressure on rents, thus causing what could be called a perfect storm.
Turning from the present state of affairs to the causes of this historic decline, the problem is structural, not situational. In recent decades, new housing supply did not outstrip demand. As is the case elsewhere in the country, there is now a strong consensus that companies have been underbuilding in Quebec for many years. Housing starts have already declined some 37% in the first three quarters of 2023.
As a result of the sharp increase in construction costs—of nearly 40% since the pandemic—and, more recently, the rise in financing costs, many housing projects are still on ice because they simply are not financially viable.
According to APCHQ, there will be 37,000 residential housing starts in Quebec for 2023, a 35% decline, and a very minor increase of 11%, with 41,000 starts, in 2024. In short, we are headed for the worst year for residential construction since 2001.
APCHQ proposes a number of measures to spur housing starts in the next few years. We welcome the elimination of the goods and services tax, the GST, on rental housing construction. That's a structural measure that is particularly appreciated by the industry.
However, we need to keep working, in particular, by providing better financing for social housing; improving and enhancing certain programs offered by the Canada Mortgage and Housing Corporation, or CMHC; and allowing a longer maximum amortization period for the purchase of a new energy-efficient home in order to lower the price of new homes relative to those of existing ones and to modify buyer behaviour while increasing the energy efficiency of the housing stock.
However, that won't be enough because demand remains very strong and is getting stronger. Our migratory balance has reached record levels. The federal government announced last week that it still plans to accept 500,000 newcomers in 2025, a target that will be maintained for the next few years. We will also have to continue to taking in large numbers of temporary workers in the next few years as a result of the general labour shortage and aging population.
In conclusion, we invite the federal government to spare no effort, to work closely with the Quebec government and municipalities and to do so in an agile manner. It will take targeted, strong and concerted action by all housing sector stakeholders to resolve the crisis.
Thank you for your attention. We are now ready to answer your questions.