Quebecers are Financially Healthy

According to a study conducted by Desjardins Economic Studies entitled  Mise à jour sur la situation financière des ménages au Québec , the financial situation of Quebecers remains healthy in 2015.  But be careful!  Understanding the results of this study is not quite so simple.  In reality, a Quebec household’s average debt has nearly doubled in fifteen years, moving from 42 000$ in 2000 to 80 000$ in 2015, and the rate of consumer pricing has increased by 30%.  So what makes Quebecers’ financial situation “healthy”, according to Desjardins Economic Studies, is that, in spite of the huge increase in household debt, the value of its assets has also increased.  Quebec household assets have reached an average of 300 000$ in 2015, up from 145 000$ in 2000, an increase explained primarily by the rise in property prices.  The average property price has gone from 100 000$ in 2000 to 275 000$ in 2015 for the whole of the province.

And despite their conclusion that Quebecers are financially healthy, Desjardins Economic Studies has still issued a warning: an unexpected loss of revenue or an interest rate hike will affect the ability of more than 12% of Quebec households to repay their loans.

Certain conditions affecting the Canadian economy as a whole will certainly also affect financial conditions in Quebec:

  • According to Statistics Canada, a growth of 1 800 job positions has been observed on the labour market in Quebec between April 2015 and April 2016.  Specifically, 5 600 full-time positions have been created, while 3 800 part-time positions have been lost.  The level of unemployment remains stable at 7.5%.
  • According to the Canadian Real Estate Association (CREA), a record 57 669 residential properties have changed hands in April 2016, an increase of 10% compared to April 2015.  The average price of properties sold in Canada was 508 097$, an increase of 13% compared to April 2015 (a growth largely influenced by the huge increases in Toronto and Vancouver).
  • Last May 25, the Bank of Canada has announced that it will maintain its interest rate at 0.5%, a decrease of 0.75% since June 2015, following a significant drop in oil prices.  The Bank of Canada predicts that results for the second quarter will be lower than previously forecast following the Albert wildfire tragedies which have impacted oil production.  On the other hand, the economy should bounce back in the third quarter, once Alberta rebuilds and resumes oil production.

If it is true that the financial situation of Quebecers is healthy, do Quebecers themselves believe it?  If so, this belief should be reflected in their real estate purchase intentions.  In effect, according to the Quebec Federation of Real Estate Boards, in partnership with the Fonds immobilier de solidarité FTQ and the Association des professionnels de la construction et de l’habitation du Québec, a study conducted to determine buyer intentions has revealed that 23% of Quebecers have the intention of purchasing a property within the next five years.

Giuseppe Diodati

Giuseppe Diodati

CENTURY 21 Excel
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