Construction costs have risen 9% in one year in Quebec, nearly triple the rate of inflation, and the market has been completely reshaped: condos have virtually disappeared from construction sites while rental housing now dominates 75% of housing starts. Between regions that are booming, such as Laval and Saguenay, and Montreal struggling to regain its momentum, five industry experts paint the picture of an industry under pressure, but not without a future.
Costs: the driver of every trend
Everything starts here. Residential construction costs have jumped approximately 9% in Quebec compared to the same period in 2025, calculates Isabelle Demers, Vice-President – Strategic Development, Public Affairs and Innovation at the Association provinciale des constructeurs d'habitations du Québec (APCHQ). "We are at approximately 9%, while the general inflation reported for the same period a year ago was around 3%," she notes. The pressure affects materials and hydrocarbons as much as wages, land values, and administrative delays. "Delays mean costs," the economist summarizes.Francine Sabourin, Executive Director of the Association de la construction du Québec (ACQ), points to two main causes. First, the price of materials, which rises without ever coming back down once the increase has been absorbed — the pandemic demonstrated this clearly. Second, over-regulation: new energy standards alone add 3% to 7% to the price of a building, fire codes add 2% to 5%, and seismic standards add 1% to 3%. "The accumulation of all these requirements is driving construction costs to unsustainable levels," she observes.Isabelle Melançon, President and CEO of the Institut de développement urbain du Québec (IDU), quantifies the concrete impact for a household. For a condo at $380,000, the regulatory surcharge would represent approximately $400 per month. "Someone currently paying $1,500 per month for housing could be paying $1,100 if it weren't for these regulations," she illustrates. No single regulation explains the bill, she notes, but their cumulative effect becomes explosive — much like, she says, a bowl of candy in the middle of a table: everyone tells themselves they'll only take one, but with so many people doing the same, there are none left.
The great shift: rental versus condo
The numbers tell a story of real upheaval. According to Francis Cortellino, economist at the Canada Mortgage and Housing Corporation (CMHC), Quebec was starting construction on approximately 14,000 condos per year between 2010 and 2014. The average fell to 9,800 between 2015 and 2018, then to approximately 2,500 in 2024 and 2025. For the first six months of 2026, there are 825 condo housing starts, compared to 1,170 at the same point last year. Approximately 1,500 condos are currently in pre-sale in Greater Montreal, and only a quarter of them are sold on plan — far below the 60% to 70% threshold generally required to obtain the bank financing needed to launch a project.Rental housing, on the other hand, has taken over completely. Isabelle Demers counts 21,726 housing starts in the rental market, with a projected increase of 5% for 2026, compared to 3,775 for single-family homes and only 823 for condominiums — a 30% drop compared to the same period in 2025. Hélène Bégin, economist at the Association professionnelle des courtiers immobiliers du Québec (APCIQ), places the share of traditional rental housing at approximately 75% of housing starts in 2025. In total, she forecasts approximately 62,000 housing starts for 2026, an increase of 3.5% to 4%, well above the historical average of approximately 50,000.Francis Cortellino confirms the underlying trend: rental housing went from an average of 5,600 housing starts per year between 2010 and 2014 to 12,200 between 2015 and 2018, even as condos were collapsing. As a result, 56,000 rental units are currently under construction in Quebec — with foundations poured but not yet delivered — compared to 13,000 in 2016. "It's the accumulation of all the housing starts from recent years," the economist notes, foreseeing a slowdown in the medium term: the demographic growth that sustained this wave is slowing, and vacancy rates in new builds are already climbing to approximately 6% in the Quebec City region, 8% in Montreal, and 10% in Gatineau. Hence the proliferation of offers of two or three free months — and, increasingly, two-year leases with no rent increases, a strategy to limit tenant turnover, the cost of which, Mr. Cortellino reminds us, is never zero: "you have to patch holes, paint."
Construction activity varies widely by region
Activity is not unfolding uniformly across the province. Isabelle Demers notes a roughly 2% increase in housing starts in the first half of 2026, but with sharp disparities: Saguenay, Sherbrooke, and Gatineau are showing strong growth, partly because they had ground to make up, while Quebec City and Trois-Rivières are declining after particularly active years. Greater Montreal, meanwhile, is barely progressing relative to needs, with marked declines in Longueuil, Laval, and the North Shore.Isabelle Melançon paints a similar picture, but with more regional detail. Laval, she says, is among the places in Canada with the most active cranes. Quebec City is benefiting from Mayor Bruno Marchand's policy to accelerate the delivery of new housing, actively leveraging the expanded powers of Bill 31. Saguenay is experiencing its own boom, fueled by federal investments linked to the port. Montreal, on the other hand, long suffered from a loss of developer interest — a social housing levy system, unique in the region, drove many developers toward other municipalities — but the new municipal administration is sending a signal of openness that the industry had been waiting for. It remains to be seen what will replace the Règlement pour une métropole mixte. "We are indeed talking about more than 580 days to obtain a permit," Ms. Melançon notes, also citing the case of Lévis, where a moratorium is completely blocking all new construction due to insufficient water infrastructure.
Building higher, denser, smaller
To make a project's numbers work despite rising costs, developers are changing the formula. "We play with the number of square feet to reduce the rental or purchase cost," explains Isabelle Melançon, who also mentions more drastic choices, such as removing a swimming pool from a project. Densification is becoming an indispensable tool: gaining height sometimes makes it possible to reduce costs for the overall project, even if the equation varies from case to case — going from 8 to 14 storeys doesn't always improve profitability, but a 15th floor can sometimes make all the difference.CMHC data confirms this shift toward height. Before the pandemic, between 2016 and 2019, 93.8% of rental buildings started in Greater Montreal had four storeys or fewer, and only 2.2% exceeded ten storeys. Between 2025 and mid-2026, that proportion fell to 84.3% for buildings of four storeys or fewer, while towers of more than ten storeys rose to 4.9% — more than double. "With rising construction costs, making a project work mathematically requires more units on the same lot," Francis Cortellino summarizes.
Demographics are turning off the demand tap
This entire wave of rental construction has been supported by exceptional demographic growth, fueled almost entirely by immigration. But the wind is shifting. Hélène Bégin notes that the effects of more restrictive immigration policies are already being felt: according to Statistics Canada, Quebec's population, particularly in Montreal, slightly declined in the first two quarters of 2026, after years of rapid growth. "A slowdown, or even a decline, in demographic growth will have an effect on the entire housing market," she warns. If Quebec is receiving fewer new residents than it is losing, demand for the most expensive rental units — often the newest — could be weakened as a result.
What's coming: a minister, a revised code, and a possible return of seniors' residences
Despite the prevailing gloom, the experts interviewed see some potential paths out of the crisis. Francine Sabourin calls for the creation of a Minister of Construction position, capable of overseeing a project from start to finish — an issue she hopes to see debated in the fall election campaign. She also calls for a thorough revision of the building code, whose implementation has already been delayed by one year, as well as a one-stop shop to simplify administrative procedures for contractors, whose paperwork — CNESST, CCQ, RBQ — reportedly costs the industry $157 million per year on its own. "I have the capacity to build, but I no longer have the administrative capacity," a contractor told her, a phrase she readily repeats to summarize the mood in the sector.On the CMHC side, Francis Cortellino sees one segment on the rebound: seniors' residences, largely neglected since the pandemic. Since late 2025, he says, building a new residence is once again more attractive than buying an existing one to renovate, as vacancy rates have dropped considerably since the lockdown years. Single-family construction, meanwhile, is unlikely to see a comparable rebound: after hovering around 20,000 units per year between 2002 and 2010, it now plateaus between 6,000 and 8,000, held back by a lack of land, regulatory densification, and demographic trends — even regions traditionally dominated by single-family homes, such as Joliette or Saguenay, are now building more rental housing.
Key Takeaways
- Residential construction costs have risen approximately 9% in one year, compared to 3% for general inflation
- Condo housing starts have fallen from approximately 14,000 per year (2010–2014) to approximately 2,500 (2024–2025), then to 825 for the first half of 2026
- Rental housing now dominates housing starts: approximately 75% in 2025, with 56,000 rental units currently under construction in Quebec
- Vacancy rates in recently built rental housing have reached approximately 6% in Quebec City, 8% in Montreal, and 10% in Gatineau
- Laval, Quebec City, and Saguenay are showing strong housing start growth; Montreal is beginning a recovery, while Lévis faces a moratorium
- The proportion of towers exceeding ten storeys has more than doubled since 2019, rising from 2.2% to 4.9% of rental buildings started
- The industry is calling for a Minister of Construction, a revision of the building code, and a one-stop shop for contractors