It’s a seller’s market as home prices rise in city

It’s now a seller’s market for single family homes

House prices in the Montreal region have reached a new high, according to two reports released on Thursday.

The aggregate price of houses and condos rose to $384,055 during the three-month period that ended on Sept. 30, according to the Royal LePage House Price Survey.

That’s a 6.6 per cent increase from the equivalent period last year and up 3.2 per cent from the previous quarter, according to the survey, which is based on Royal LePage sales data.

Those increases are important, said Dominic St-Pierre, Royal LePage’s senior director for the Quebec region.

“If you look at the last 25 years, there’s just two years where there was an actual decrease in price year over year. Prices are usually going up,” he said. “Now, we see that the increase in prices is accelerating a bit.”

While prices are increasing quickly by Montreal standards, he said, the increases are much healthier than those seen in cities like Toronto and Vancouver. Here, he said, price increases are being driven by underlying economic growth, rather than speculation.

Central Montreal saw the biggest price growth, St-Pierre said.

The median selling price of twostorey houses there grew 7.2 per cent over the quarter to $740,214. That’s an increase of 19.2 per cent from the equivalent period in 2016.

It’s now a seller’s market for single family homes, he said, and supply is going down quickly.

“On the condo side, we just entered a balanced market. That almost seemed impossible just a year ago” due to a level of inventory that was expected to last for multiple years, he said.

While the Bank of Canada increased interest rates twice over the summer, and is expected to do so again, St-Pierre said he doesn’t expect that to slow Montreal’s housing market.

“Because the market is so strong, because the demand is so strong, there’s a strong pressure on supply and that’s why we think that, no matter the increase in interest rates,” he said, “the market is going to be pretty strong over the coming year.”

Another report, which uses a different methodology, is also showing growth.

The Teranet–National Bank Housing Price Index for Montreal, which measures the selling price of homes that have previously sold more than once, rose 0.27 per cent in September.

It was up 5.76 per cent from the equivalent period in 2016.

That index, which uses June 2005 as a base, reached a new high for Montreal in September: 159.68. That means that prices have risen 59.68 per cent since June 2005.

The index attempts to control for fluctuations in median prices that can come as a result of the mix of houses sold during a given period by comparing the selling price of individual properties to the price those properties sold for in the past, which might lead to different results from other methods.

St-Pierre said the biggest surprise in the Royal LePage House Price Survey was the increase in the number of foreign buyers in Montreal as a result of new taxes in Vancouver and Toronto.

This year, St-Pierre said, the number of buyers from China will probably surpass those from France, which had been the second-largest group of foreign buyers after Americans.

Still, St-Pierre said he believes international buyers still account for less than two per cent of all purchasers.

“It still doesn’t have a huge effect on the overall market,” St-Pierre said. But that could change if the number of foreign buyers continues to grow.