Get ready for another strong year in Montreal real estate.
Quebec as a whole is outperforming the rest of Canada. Yet housing affordability has deteriorated and is now approaching “critical levels,” an economist warns.
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.