Button CopyPathCircle CloseCircle Left ArrowArrow Down Icon GreyClosecirclecircleBurger
Français

Your personal VOWS Listing Portal is provided by Royal LePage Real Estate Services, Brokerage

Half of Quebec renters who do not plan to buy a property in the near future credit insufficient income: Royal LePage survey

Concerns about the adequacy of their income given current real estate market prices are the main motivation for remaining renters 

Highlights:

  • 51% of Quebec renters who do not plan to purchase a home in the next two years doubt their income would allow them to buy a property in their desired location
  • According to the survey, the expectation that property prices and interest rates will fall, as well as an insufficient down payment, are among the main reasons for continuing to rent rather than buy
  • 28% of renters in Quebec considered buying before signing or renewing their lease this year; 43% among those aged 18-34
  • Only 22% of Quebec renters plan to buy a property in the next two years; more than a third of them (36%) do not believe they will be able to buy in their current city
  • 45% of Quebec respondents say that rent payments account for more than 30% of their net income 

MONTREAL, QUEBEC, June 20, 2024 – With July 1st just around the corner, an interesting trend is emerging among Quebec renters. According to a Royal LePage survey of 742 Quebec renters, conducted by Hill & Knowlton,[1] a segment that represents 38.2% of the province’s population,[2] more than a quarter of respondents (28%) considered becoming homeowners this year before signing or renewing their lease, while 69% did not.

Among the reasons why Quebec renters are choosing to rent rather than buy, 42% are waiting for a drop in property prices, 41% are waiting for a reduction in interest rates, 37% don’t have a sufficient down payment, 24% say that continuing to rent their home allows them to save for a future purchase, 14% remain undecided on the property type or location, 13% cite a lack of properties for sale, 12% have been unable to qualify for a mortgage, and 5% say their purchase attempts have been unsuccessful. Respondents could choose more than one answer.

“The results of this survey highlight the challenges faced by Quebec renters in the current context of a housing supply shortage,” said Geneviève Langevin, residential and commercial real estate broker, Royal LePage Altitude, in Montreal. “However, the desire to become a homeowner persists for many, despite the financial obstacles, which is encouraging since this trend will continue to put pressure on public policy-makers to create housing that meets demand and population growth.”

In particular, Ms. Langevin cites the initiatives included in the new Canadian Tenants’ Bill of Rights, announced as part of the 2024 federal budget, as a good starting point for helping this important segment of the population realize their dreams of home ownership. Most notably, the proposal to count tenants’ monthly rent payments towards their credit rating.

“The process of buying your first property can seem daunting, especially in such a competitive market where the limited number of properties puts constant upward pressure on prices,” adds Ms. Langevin. “The best way to succeed in entering the real estate market is to be well prepared. My first recommendation is to surround yourself with professionals, such as a real estate broker, a mortgage specialist or broker, and a financial advisor. These experts will be able to advise you at different stages of your home-buying process, helping you define your available budget and the type of property you can afford. Getting in early will ensure that you’re on the right track and not wasting time looking for a product that is not right for you. Of course, mortgage pre-qualification will be essential to get your plans off the ground and demonstrate your commitment to potential sellers.”

One in five renters planning to buy in the near future

Despite a strong desire to become homeowners, only 22% of Quebec renters plan to buy a property in the next two years. Among them, less than half (40%) believe that when the time comes to buy, they will be able to afford to live in their current city of residence. Interestingly, an almost equal number (36%) think they won’t be able to afford to buy in their city, and a quarter of renters in the province (25%) intending to buy don’t know whether they’ll be able to afford to buy in their city or not.

Among those who don’t believe they can buy in their current location, one third (33%) believe they will have to search for a property within a 31-50 kilometre radius, 25% will have to look within a 16-30 kilometre radius instead, 21% believe they will have to travel more than 50 kilometres from their current home to buy within their budget, and 13% are confident they can buy within 15 kilometres of their current location. These results show that renters are willing to compromise on location to realize their dream of home ownership.

Among the nearly six in ten Quebec renters (58%) who do not plan to buy a property in the next two years, half (51%) do not believe their income will allow them to buy a property in their desired neighbourhood. Twenty-seven per cent of respondents say that renting remains more affordable in the short to medium term, 25% don’t want to take on the responsibilities of maintaining a property, 18% consider their lifestyle to be better suited to the flexibility of renting, 18% give priority to other life goals (education, travel, leisure, etc.) and 15% invest their money elsewhere (shares, RRSPs, TFSAs, etc.). Respondents could choose more than one answer.

“This data highlights the economic challenges and financial pressures facing Quebec tenants. The situation is prompting some of them to consider alternative solutions, such as moving to another neighbourhood or city to gain access to home ownership,” notes Ms. Langevin.

Among renters in Montreal, nearly a quarter (23%) say they plan to purchase a home in the next two years. Of them, 34% believe they will be able to afford to buy a property in your current city of residence, while 43% do not.

Meanwhile, the Royal LePage 2024 Most Affordable Canadian Cities Report, published last month, showed that 54% of Montrealers would consider moving to another more affordable city to access home ownership. Montreal renters were more inclined (61%) than their owner counterparts (49%) to leave their current place of residence and lifestyle in order to get on the real estate ladder.[3]

“If your job or occupation allows you to work remotely, or you’re willing to consider a move a little further away from your current neighbourhood, you could increase the selection of properties available within your budget,” suggests Ms. Langevin. “If you’re not ready to leave your current city, be sure to consider all the alternatives to help you build a larger down payment, such as municipal, provincial and federal home ownership assistance programs. You may also want to adjust the size and type of property you’re targeting in order to increase your chances of success,” she added.

Diversified sources of income to build a down payment

To build their down payment, nearly half of renters planning to buy a property in the next two years (48% or about one in five renters) are counting on their savings accumulated over the years. Forty-six per cent intend to take advantage of the First Home Savings Account (FHSA), while 34% say they would use the Home Buyers’ Plan (HBP). Twelve per cent would use a gift from family, and 4% would use an inheritance. Respondents could choose more than one answer.

Among Quebec renters who plan to buy a property in the next two years, an equal number (23%) say they would put a down payment of 5%, 10% or 20%, while 17% say they would put a down payment equivalent to 15% of the property’s purchase price. A further 8% would put a down payment of more than 20%. In Canada, mortgage insurance is mandatory for homes purchased with less than 20% down.

The vicious cycle continues

Quebec renters are facing a difficult economic climate, which is affecting their ability to enter into home ownership. Demand for housing, exacerbated by the pandemic real estate boom, has not been kind to those in the rental market, where prices have been rising steadily. This has made it more difficult for tenants to save for a down payment on an eventual purchase. What’s more, higher interest rates over the past two years have greatly reduced the purchasing power of many aspiring homeowners.

According to the Financial Consumer Agency of Canada, rent and housing-related expenses should not exceed 35% of a household’s gross income.[4] Yet, according to the Royal LePage survey, 45% of Quebec renters say that rent payments require more than 30% of their net income, which significantly limits their ability to save for a down payment. Eight per cent of renters say they spend more than 50% of their net income on rent, 16% say rent represents between 41% and 50% of their net income, and 21% say between 31% and 40% of their net income goes to rent. On a more encouraging note, 30% of respondents say their rent represents between 21% and 30% of their net income, and a further 11% say it represents less than 20%, suggesting that, despite the challenges, a significant proportion of tenants manage to maintain a relatively stable financial balance. It should be noted, however, that rent rarely takes into account utilities and telecommunications costs. 

According to the latest Rental Market Report from Canada Mortgage and Housing Corporation (CMHC),[5] the average rent for a two-bedroom unit in the Montreal CMA rose by 7.9% between October 2023 and the same month in 2022. Between October 2018 and October 2023, rent appreciated by 35.5%.[6]

While 2023 saw record low housing starts in Quebec, CMHC expects the province to see a more vigorous increase than elsewhere in Canada in 2024.[7] However, new residential developments will remain too few to meet growing demand.

“The gradual easing of interest rates, which began with the first cut in the Bank of Canada’s key lending rate on June 5th, should stimulate construction in the rental market. However, this expected increase in housing starts will not have an immediate impact on the province’s housing supply,” adds Ms. Langevin. “I’m pleased to see that the various levels of government have begun to think together about alternatives for rapidly increasing housing supply. Unfortunately, the results of these concerted efforts will take time to materialize.”

Royal LePage 2024 Quebec Renters Report – Data Chart: rlp.ca/2024-Quebec-Renters-Report-Chart

Royal LePage resources for aspiring homeowners:

To help aspiring homeowners, Royal LePage has published a number of online resources available at the following links:

About the Survey

Hill & Knowlton used the Leger Opinion online panel to survey 742 Quebec residents, aged 18+, who rent their primary residence. The survey was completed between June 7th and June 10th, 2024. Representative sampling was done across Québec regions (Montreal, Québec City, rest of Québec). Weighting was applied to ensure age and gender representation, according to 2021 household renter census figures. No margin of error can be associated with a non-probability sample (i.e., a web panel in this case). For comparative purposes, though, a probability sample of 742 respondents would have a margin of error of ±4%, 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.

Royal LePage® is a registered trademark of Royal Bank of Canada and is used under licence by Bridgemarq Real Estate Services® Inc.

For further information, please contact:

Jillianne Gignac
Hill & Knowlton on behalf of Royal LePage
jillianne.gignac@hillandknowlton.com
514-929-6170

 

 

[1] Hill & Knowlton used the Leger Opinion online panel to survey 742 Quebec residents, aged 18+, who rent their primary residence. The survey was completed between June 7th and June 10th, 2024. Representative sampling was done across Québec regions (Montreal, Québec City, rest of Québec). Weighting was applied to ensure age and gender representation, according to 2021 household renter census figures. No margin of error can be associated with a non-probability sample (i.e., a web panel in this case). For comparative purposes, though, a probability sample of 742 respondents would have a margin of error of ±4%, 19 times out of 20.

[2] Statistics Canada. Table 46-10-0064-01  Housing indicators, by tenure including first-time homebuyer status

[3] Royal LePage, 4 Quebec cities make the list of Canada’s most affordable housing markets; Montrealers ready to move, June 6, 2024

[4] Government of Canada, Renting an apartment or house, December 19, 2023

[5] Canada Mortgage and Housing Corporation, Rental Market Report, January 2024

[6] Calculation based on CMHC Rental Market Report data from 2018 and 2024

[7] Canada Mortgage and Housing Corporation, Housing Market Outlook, Spring 2024