Inflation is slowing in the country. The change in the consumer price index over one year fell from 6.8% in November 2022 to 3.1% twelve months later. In other words, prices are still rising, but less quickly. The duty provided an overview of the expenditure items that are expected to continue to grow in 2024.
The cost of housing takes up almost a third of the household budget in the country, according to Statistics Canada. For both tenants and owners, 2024 promises to be a tough year.
Rental prices are expected to continue their upward trend. The Canada Mortgage and Housing Corporation is forecasting an increase of nearly 10% in the average rent for a two-bedroom unit in the Montreal region due to the low vacancy rate.
For buyers, experts are divided as to the evolution of prices in 2024. At Royal LePage, we are counting on increases of 4.5% to 6% depending on the type of housing in Greater Montreal, while the Professional Association of Real Estate Brokers of Quebec forecasts increases of 1% to 2%. TD Bank instead believes in a 10% drop in prices from coast to coast.
One thing is certain, households who took out a mortgage before the rate increase initiated by the Bank of Canada in March 2022 must expect a price shock when they renew. Although the key rate — which influences mortgage rates — has stabilized at 5% since August, we are a long way from the 0.25% that prevailed in March 2020. All bets are off as to when rates will decline, which could happen in the second quarter of 2024, according to several economists, but at their current level, the median monthly mortgage payment in the country should increase by more than 5% in 2024, according to the Bank of Canada.
“Housing is an essential need and the still glaring lack of units to meet the growth in demand and population is doomed to continue, as long as investments from levels of government do not materialize in the landscape urban,” explains Dominic St-Pierre, vice-president and general manager for Quebec at Royal LePage, in a blog published in December.
The second most important item in Canadians’ wallets, the price of food continues to be the talk of the town. In a report released in December, researchers from four Canadian universities predicted that food prices will increase by 2.5% to 4.5% in the country in the next year. The price of baked goods could increase by up to 7%, as could that of meat and vegetables. The restaurant bill should increase by 3% to 5%. Note that for Quebec, after an overall increase of 6.7% in 2023, researchers expect an increase lower than the national average in 2024.
Canadians allocate 15% of their spending to transportation. The International Energy Agency forecasts the price of a barrel of Brent oil – a benchmark – at US$83 next year due to a reduction in production from OPEC + countries. The price of a barrel stood at just over US$76 at the end of December, but was very volatile during the year, particularly due to geopolitical tensions.
If the evolution of prices at the pump is uncertain, that of new and used vehicles is pointing upwards. The increase in the purchase price would have been between 5% and 8% in 2023. Charles Bernard, senior economist at the Corporation of Automobile Retailers Associations, predicted this summer that prices will not fall significantly again in 2024. He explained this by the scarcity of new vehicles and the increase in manufacturing prices from manufacturers, among others.
As for public transportation, the Société de transport de Montréal generally announces its fare increases in the spring. They were on average 2.63% between 2018 and 2023.
Taxes and utilities
In Montreal, municipal taxes for residential buildings will increase by an average of 4.9% next year. Quebec City limited its increase to 3.9%.
In October, François Legault promised that Hydro-Québec’s residential rates, now indexed to inflation, will never increase by more than 3% per year. The rise in prices will therefore depend on the consumer price index, which is on a downward trajectory. Higher price increases are planned for businesses, which should be reflected, at least in part, in consumers’ bills.
Motorists in the Montreal suburbs will have to pay a registration tax of $59 intended to finance public transportation from 1er January 2024. In Montreal, where this measure already exists, the tax will increase from $45 to $59, an increase of 31%.
The maximum annual contribution of a Quebec worker to the employment insurance plan will increase from $781 to $834 (+6.8%) in 2024. For the Quebec Pension Plan, the maximum contribution will increase by 7.7%.
And all the rest…
According to the Rabehub.ca website, insurance premiums are expected to continue to rise in 2024, in particular due to high property replacement prices and increased risks of natural disasters due to climate change.
Notice to travelers: starting in March 2024, airport improvement fees will increase from $35 to $40 per ticket at Montreal-Trudeau International Airport.
All this is enough to discourage many. Let us recall, however, that the increase in wages has helped improve the purchasing power of Quebec households since 2019. In this regard, in a note based on consultations carried out with different compensation firms, the Employers’ Council estimated in September that wages are expected to increase by 3.6% to 4.1% in 2024, rates above expected inflation.