Why are homes cheaper in Quebec?

Canadians are well aware of the affordability struggles that are facing the housing market at the moment, with rising interest rates doing little to improve the situation despite bringing inflation under control. Toronto and Vancouver are the country’s hottest real estate markets, but have also seen some of the largest decreases due to their high volatility. Despite this, prices have been on the rebound for some months and while not yet back to their 2021 highs, are still much more than many Canadians can afford. 

Ontario is Canada’s largest province with a population of over 14 million, but coming in second isn’t British Columbia, or Alberta, but Quebec with more than 8 million residents. Despite it’s large population, Quebec’s housing market hasn’t been seeing appreciation at the same rate as other provinces.

In this article, let’s take a look at the differences between the Quebec and the Ontario real estate market.

The price of homes in Quebec compared to Ontario

The benchmark residential average price in Quebec is $492,190 in 2023, compared to $896,296 in Ontario.

In Montreal the median price of a single-family home was $520,000.

In Toronto the same median priced home would cost $1,350,000.

Supply and demand

Like any market, the housing market is fundamentally a product of the two key economic forces. When the supply for a good lags behind the demand for it, buyers are willing to pay more to ensure they get a piece of the pie. In the real estate market, where buyers compete against each other, often with blind bidding; emotions can run high and as a result prices can swing even more wildly.

As the real estate market functions very similarly across all of Canada, there must be a supply or demand factor that has kept the cost of housing in Quebec lower than other provinces, or a combination of both.

Let’s take a look at some of the supply and demand factors that have been impacting the Quebec market compared to Ontario to get a better idea of why housing is relatively cheaper in Quebec.

The language barrier

One very real barrier to entry for many would be migrants moving to Quebec is the language barrier. English is a more common language than French, and while French is taught as a mandatory subject in public education, most Canadians French skills may dissuade them from a move to the province. Additionally, when we consider that the vast majority of Canada’s population growth comes from international migration, it makes sense that most newcomers would prefer to live in a province where the global lingua franca is the norm.

The job market is a huge factor that impacts people’s desire to move, and most jobs in Quebec will require at least some level of French proficiency from their employees if not fluency. The population of French speakers is lower than that of English speakers, and therefore the other provinces are more desirable to migrants in that regard.

Population growth.

One of the largest factors impacting the demand side for real estate is growth (or decline) of the population. The more people there are in a place, the more demand there is for housing, which raises the price. Perhaps due in part to the reason mentioned above, Quebec has a far lower rate of population growth than Ontario and the rest of Canada. According to Statistics Canada the population of Quebec grew by 1.7% in 2022 which despite “A record-breaking number of immigrants” was still well below the national rate of 3%. Most newcomers to Canada settle in Ontario, with over 40% of Canada’s population growth coming from the province. As a result, there is more increasing demand for housing in Ontario than in Quebec, so if the rate of new supply built were equal, we would naturally expect prices in Ontario to increase faster than Quebec.

Development costs

On the supply side, the main factor impacting the ability for provinces to build new housing are developmental regulations and the labour force. While labour shortages in the construction industry are present across the country, there are some key differences in developmental costs in Ontario when compared to Quebec. The Development Charges Act of 1989 in Ontario has been criticized by some for leading to increased developmental costs compared to other provinces.

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