MONTREAL - Sales of homes in the Greater Montreal Area grew by five per cent last month, the first rise in 14 months, the Greater Montreal Real Estate Board said Wednesday.
The June rise, compared with the same month in 2010, was driven by a 17-per-cent increase in Montreal Island condo sales, Multiple Listing Service data show. Sales continued to drop in Laval and on the South Shore.
But the rise in sales is not necessary indicative of a new trend. Rather, these latest results appear stronger because of especially weak sales in June 2010, the board said.
“The increase in sales in June is encouraging news but it must be interpreted with caution as we are comparing June 2011 results with those of June 2010, when sales had decreased by 20 per cent,” said Diane Ménard, vice-president of the GMREB’s board of directors. “With this increase, sales in the Montreal area are approaching the levels that were seen in June 2007 and 2008, two prosperous years for the real estate market.”
Indeed, the drop in housing resales for the last 14 months suggests a correction has already begun taking place in Montreal’s heated housing market, a report published Wednesday by TD Economics says. While median prices were still up in the Montreal area last month – rising six per cent for single-family homes and plexes and five per cent for condos – home values should soften next year.
“Prices are typically lagged to sales and thus, we anticipate that 2012 will bear much of the brunt of the decrease,” the TD report by deputy chief economist Derek Burleton and economist Sonya Gulati said. “Still, the early move on the sales correction should give Montreal a slight edge when compared to the national forecast.”
Nationally, the report said the Canadian housing market is set to undergo a “modest” correction, with resale activity poised to drop 15.2 per cent and average prices likely to fall 10.2 per cent over the next two calendar years.
“A combination of more subdued job and household income growth, rising interest rates, the recent tightening in borrowing rules for insured mortgages and fewer first-time home buyers are expected to be the chief culprits behind the slowdown,” the economists said.
In Montreal, Gulati and Burleton raised a question – but not alarm – over the record-breaking amount of condo building in the city. “The condo supply and the degree, if any, of overbuilding is something to keep an eye on for this region,” they wrote.
In the Montreal area, the median price for a single-family resale home rose to $275,000 last month, while plexes rose to $409,000. The median price of a condominium grew by five per cent to $223,750.
Postmedia News contributed to this report
alampert@montrealgazette.com
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