First, experts identify several reasons for this: lower wages, fewer foreign buyers, Catholic heritage, etc.
However, most experts forget to mention one of the most important reasons: urban planning rules. The amount of land in a large city is limited and zoning shapes a city. In Toronto, only single-family homes can be built on 62.3% of the Queen City's residential land area. In Calgary, it's 67.2% and in Edmonton, 69.3%. In Vancouver, it's 80.5%! And in Montreal, it's 45.8%!
Vancouver has recently allowed the conversion of a single family home into a duplex. However, this will have little impact. In all of these cities - except Montreal - there are essentially only towers and single-family homes. There are relatively few plexes or multi-units. Many people want to live in Vancouver, but supply is severely limited by zoning. This is why Vancouver is the most expensive city in the country.
Montreal is an older city than Toronto and Vancouver. Its central neighbourhoods - such as the Plateau-Mont-Royal - were built in the early 20th century, before the widespread use of the car. It was the introduction of the streetcar that spurred the development of the Plateau. In neighbourhoods built after World War II, there are unsurprisingly many more single-family dwellings (in the Town of Mount Royal, Saint-Léonard and Lasalle, for example) and plexes often have garages.
Although Montreal is inspired by Europe for its plexes, it is different. Each unit in a plex has its own door, with its own iconic exterior staircase. In Europe, there is only one front door and the stairs are inside. The city wanted to avoid having buildings too close to the street, which reduced the amount of each lot on which buildings could be built. So to save space, the builders chose to take the stairs to the apartments outside the building. Not having an interior staircase reduces the amount of unnecessary space to heat during the winter.
I invite you to do a small simplistic exercise of densification of a city:
- A city with only single-family dwellings provides 1,000,000 units.
- This city replaces 600,000 single-family homes with 600,000 triplexes, so it offers 2,400,000 dwellings.
There are almost no vacant lots in a city. To increase density, you have to allow buildings other than single-family homes. In May 2021, Scotiabank released a report saying that Canada's housing supply is the lowest in the G7, which is pushing up prices. More housing is needed, but unfortunately it is often difficult to densify.
Zoning artificially restricts the supply of housing and is a pernicious way to increase prices. Montreal is in a much better position than other cities. For the price difference between Montreal, Toronto and Vancouver, is zoning the main reason? It is difficult to be 100% certain, but it is one of the main factors.
Montreal will always have the highest relative supply of rental units. This is why rents will always be lower than elsewhere.
For a real estate investor, plexes and multi-units are a large market in Montreal.
Source : Article by Jean Sasseville on the website lesaffaires.com on the 18 August of 2021
Link : https://www.lesaffaires.com/blogues/jean-sasseville/pourquoi-l-immobilier-est-il-moins-cher-a-montreal/626628
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