Searching for an apartment to rent isn’t easy now, and it’s probably going to get even harder.

Representatives of the commercial real estate industry in Quebec predict that developers will be less interested in building rental housing units in the future.

The construction of rental apartments will be slowing down even though the vacancy rate is extremely low in many Quebec regions, where a shortage of quality rental housing is already a problem.

A new fiscal framework was put into place at the same time as the hike in the provincial sales tax, explains the Urban Development Institute of Quebec (UDI), which acts as an intermediary between industry professionals and government entities.

The budget tabled last spring by Finance Minister Raymond Bachand increased the partial refund of the QST to developers who build single housing and condominiums. The increase in the partial refund does not apply to developers of rental units.

This is a distortion of the government’s new policy, which claims to facilitate access to property, according to the independent, non-profit organization founded in 1987. They state that Bachand has taken a risk that will negatively affect the renewal of rental housing stock, even though this type of housing is where of 4 out of 10 Quebeckers live.

The increased cost of construction will result in rent hikes. Young households putting money aside to buy a property later will have less money to save because they will be paying more in rent. «We are already feeling the repercussions of last spring’s budget decisions. We are dreading rent hikes just as much as the slowdown of of rental unit construction, because it negatively affects so many Quebeckers, which is a real shame,» warns Michel Parent, member of the regional council of the UDI and president of Logisco.

Housing affordability slips in Montreal

Quebec’s housing market faced higher ownership costs in the first quarter of 2011, following modest declines in the latter half of 2010, according to the latest Housing Trends and Affordability report released May 20 by RBC Economics. Consistent price increases over the past year means raising the bar for home buyers in the province. RBC anticipates that interest rate increases will raise that bar even higher in the period ahead. Property values in the Montreal-area market appreciated substantially for key housing categories in the first quarter of 2011. Montreal is the city with the strongest home price gains in the country relative to a year ago. With affordability measures rising above the national average and a narrowing of the gap with Toronto, Montreal is losing its status as an affordable market.

[ Marie Cicchini ]