'Montreal is sexy' and its housing market is expected
to break records in 2020
Quebec as a whole is outperforming
the rest of Canada. Yet housing affordability has deteriorated and is now
approaching “critical levels,” an economist warns.
Updated: January 23, 2020
Get ready for another strong year in
Montreal real estate.
Residential property sales in the
greater Montreal area are set to climb six per cent this year to a record
54,600 units, according to a forecast released Thursday by the Quebec
Professional Association of Real Estate Brokers. The group, which represents
more than 12,700 brokers and agencies, is also forecasting six-per-cent
increases in condominium and single-family home prices for 2020.
“Montreal has entered a phase of
exuberance,” Charles Brant, the association’s head of market research, said
Thursday at a presentation attended by property brokers and reporters. “There is a clear lack of supply.”
A record 51,329 properties were sold
in greater Montreal last year, a 10-per-cent jump from 2018, the association
said, citing data from the Centris system. This marked the fifth consecutive
annual increase of more than five per cent. The transactions had a combined
value of $20.3 billion, 15 per cent more than in 2018.
Full employment, rising disposable
income, low interest rates, positive migratory flows and government incentives
for home ownership are all contributing to the expected growth in real-estate
demand. Still, an anticipated slowdown in economic growth — combined with
labour shortages — could negatively impact job creation and prevent Quebec’s
economy from reaching its full potential, the association said.
Activity last year was particularly sustained in some outlying
municipalities, as evidenced by increases of 21 per cent in
St-Jean-sur-Richelieu, 15 per cent on the South Shore and 14 per cent on the
North Shore. Sales in Laval jumped 13 per cent, outstripping the four-per-cent
gain posted by the island of Montreal.
All major property types recorded
price increases. Plexes, defined as properties of two to five dwellings, rose
seven per cent to a median price of $550,000. Single-family home prices
advanced six per cent, to $340,000, with condominium prices climbing five per
cent to $267,900.
Housing affordability in Montreal
has deteriorated and is now approaching “critical levels,” Hélène Bégin,
economist at Mouvement Desjardins, told attendees. The city’s residential
market is showing signs of overheating, and
“a risk of overvaluation exists, though we’re not there yet,” Brant added.
Bidding wars are now an inescapable
reality, especially in the central neighbourhoods. Thirty-nine percent of
single-family homes sold in Rosemont last year elicited bidding wars, while the
proportion in Villeray was 36 per cent, Brant said, citing QPAREB data.
Non-residents now account for about
15 per cent of all residential transactions in the downtown core, Brant said.
The figure reflects Montreal’s newfound popularity among
foreign investors, according to Patrice Groleau, who owns the McGill
Immobilier and Engel & Volkers real-estate agencies.
“There’s never been this much money
in Montreal,” Groleau said at the event. “Montreal is sexy. People from all
over the world want to come and live here.”
Anecdotally, Groleau said one of his
brokers recently took on his first $1-million property mandate
in Hochelaga-Maisonneuve, which has traditionally been one of Montreal’s
poorest districts.
Quebec as a whole is outperforming
the rest of Canada. Residential property sales in the province rose 12 per cent
last year, with median prices for single-family homes climbing four per cent,
compared with increases of six per cent and 2.5 per cent respectively for all
of Canada.
More than 96,500 residential
properties changed hands in Quebec last year, a new record, and QPAREB predicts
the 2020 total will top the 100,000 mark for the first time as median prices
for single-family homes advance five per cent.
Active listings across the province
fell 12 per cent in 2019, settling at the lowest level since 2010. It took an
average of 97 days to sell a home in the province, the smallest figure since
2012. Montreal-area properties sold even faster, averaging 71 days on the
market, amid a 19-per-cent plunge in active listings.
Those numbers firmly put Montreal —
and all of Quebec — into “seller’s market”
territory. A region or area is deemed to be a seller’s market when fewer than
eight months are required to sell the housing inventory.
