More than a third of Quebecers who will be renting as of July 1st have considered buying a property this year
As the all-important moving day approaches, the road to home ownership remains fraught with obstacles for many Quebec tenants
MONTREAL, June 21, 2023 – While property prices in Quebec remain among the most affordable in the country, the province continues to post one of the highest proportions of renters in Canada. Quebec’s home ownership rate stands at just 59.9%, almost 7% lower than the national average (66.5%), according to Statistics Canada’s latest census data.[1] With Quebec’s annual moving day approaching, a Royal LePage survey conducted by Maru Public Opinion[2] reveals that a significant proportion of Quebec renters (35%, or nearly 750,000 Quebecers)[3] have considered buying a property instead of renting in preparation for July 1st; a sign that despite financial and market-related obstacles, many aspire to become homeowners.
When asked about the motivating factor behind their decision to rent rather than buy a property this year, 24% of respondents said they decided to wait until home prices decline, while 15% said they have decided to wait until interest rates decline. Another 14% said their attempt(s) to purchase a home was (were) unsuccessful, 12% were still deciding which property type and/or where they would like to buy, 11% said the selection of available properties for sale was insufficient, 10% said they did not have a sufficient down payment, and 8% did not qualify for a sufficient mortgage. Overall, 57% of respondents made their decision based on financial considerations.
“The imbalance between supply and demand that has caused significant price increases in the real estate market in recent years has also affected the rental market, making it even more difficult for renters aspiring to home ownership to save for a down payment,” said Roseline Guèvremont, residential real estate broker, Royal LePage Tendance in Montreal. “For those who are hoping to see prices decline, this is unlikely as demand continues to outstrip supply and there is still a shortfall of 100,000 housing units in Quebec.”
Similar to the resale market, prices in the rental market have also risen quickly. According to the Canada Mortgage and Housing Corporation’s (CMHC) 2023 Rental Housing Survey,[4] the average rent for a traditional two-bedroom unit increased 5.4% between October, 2021, and October, 2022. For units that turned over, the average rent rose 14.5%.
Many renters are still contemplating the idea of becoming homeowners. Among renters who considered buying a property rather than renting this year, 18% say they plan to acquire a property within the next two years.
Of those who said they were not planning to buy a property within the next two years (66%), 32% said the motivating factor behind this decision was that they didn’t believe their income will allow them to buy a property in their desired neighbourhood. Renters also reported that they did not want to assume the maintenance responsibilities of home ownership (17%), and that renting remains more affordable in the short- to medium-term (16%).
Among the many factors driving demand in Montreal’s rental market, the Prohibition on the Purchase of Residential Property by Non-Canadians Act (foreign buyer ban), which came into effect in January of 2023, is said to have contributed to a shift sending potential homebuyers to the rental market, until the spring, when the Act was amended to exempt non-Canadians coming to the country to study or those holding a work permit.
“International students, for example, who were restricted from buying moved into the rental market, creating in some cases bidding competitions, but above all, further limiting the number of units available,” explained Guèvremont.
Of the respondents who will be renting as of July 1st, 2023, a significant proportion (32%) said they had previously owned their primary residence. Of this group, 29% indicated that financial constraints motivated their decision to move from owning to renting their home (16% said they could no longer afford their mortgage since interest rates have increased this year, and 13% moved to another region where property prices are less affordable). Meanwhile, 28% reported the main reason for transitioning to renting was that they had separated or divorced, and 21% noted retirement.
In total, the survey found that 31% of Quebecers (approximately 2.1 million people) will be renters as of July 1st, 2023 (23% have renewed their existing lease, 5% will be moving from one rental property to another, and another 3% will be moving into their very first rental property). Overall, only 5% of Quebecers say they will move from renting to owning on July 1st this year.
Of those who will be renting as of July 1st, 2023, 11% currently own an investment property, a sign that a number of renters are generating rental revenue that can contribute to their savings.
“I’m noticing that more and more people are aspiring to use real estate as a savings mechanism, particularly the younger generation of buyers,” said Guèvremont. “However, investing in real estate without first owning your primary residence is not intuitive. I recommend that those considering investing in an income property while renting should carefully calculate profitability and expenses, such as property and land transfer taxes, mortgage payments, as well as maintenance costs, to verify that rental income is sufficient.”
Guèvremont recommends that renters looking to enter the resale market consult the right professionals, including a mortgage specialist and a real estate broker, in order to best plan for the purchase of a first home, and be prepared for the lifestyle changes that come with home ownership.
Table – Royal LePage’s 2023 Quebec Renters Report – rlp.ca/table_2023quebecrentersreport
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About the Survey
This Maru Public Opinion survey conducted on behalf of Royal LePage was undertaken by the sample and data collection experts at Maru/Blue. 811 randomly selected Canadian adults from Quebec who are Maru Voice Canada online panelists were surveyed from June 12th to June 14th 2023, among which a random selection of 228 respondents who are starting a rental property lease on July 1st 2023. The results of this study have been weighted by education, age, gender, region and language to match the population, according to Census data. This is to ensure the sample is representative. Discrepancies in or between totals are due to rounding. For comparison purposes, a probability sample of this size has an estimated margin of error (which measures sampling variability) of +/-6.5%, 19 times out of 20.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of approximately 20,000 real estate professionals in over 670 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, which has been dedicated to supporting women’s shelters and domestic violence prevention programs for 25 years. Royal LePage is a Bridgemarq Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.
For further information, please contact:
Lara Berguglia
North Strategic for Royal LePage
lara.berguglia@northstrategic.com
514-994-2382
[1]Statistics Canada, To buy or to rent: The housing market continues to be reshaped by several factors as Canadians search for an affordable place to call home
[2]Maru Public Opinion survey conducted on behalf of Royal LePage was undertaken by the sample and data collection experts at Maru/Blue. 811 randomly selected Canadian adults from Quebec who are Maru Voice Canada online panelists were surveyed from June 12th to June 14th 2023, among which a random selection of 228 respondents who are starting a rental property lease on July 1st 2023.
[3]Statistics Canada, Population estimates on July 1st (Quebec residents aged 20+), by age and sex
