Home sales reach record
Greater Montreal Real Estate Board sees 15 per cent increase from a year ago
Realtors in Montreal said Tuesday sales of existing homes reached record levels last month, as concerns continue to grow that foreign buyers may be eyeing the city as an alternative to jurisdictions such as Greater Vancouver and southern Ontario where they face a special tax.
The Greater Montreal Real Estate Board said there were 5,057 residential sales in May, a 15 per cent increase from a year ago and the best May ever — topping a peak hit in 2007. The median price of a single family home jumped six per cent from a year ago to $319,000.
“As I understand it, non-resident buyers have been a growing factor in Montreal for some time,” said Doug Porter, chief economist with Bank of Montreal. “It hasn’t been obvious since the inflows are not as significant as in Vancouver or Toronto, and the underlying market simply isn’t nearly as tight as in those other two cities, so prices have remained well contained. In fact, Montreal appears highly affordable globally, and that by itself may slowly generate more foreign buyer interest. While it’s early to say, certainly there is a good possibility that some flows may now gravitate to Montreal from the GTA.”
The leader of Projet Montreal, the city’s main municipal opposition party, has said she’s worried there will be a rush of outside buyers into the marketplace. Valerie Plante plans to fight in the next municipal election on getting power from the province to impose a tax.
Carlos Leitao, Quebec’s finance minister, said his department was monitoring whether the tax from Ontario will have a spillover effect on the Montreal market.
“We just want to be prepared that if it needs to be done then we can do it quickly, but I don’t have any plans to do anything in the shortterm,” he told the Canadian Press this month.
The tax, along with 15 other measures to cool the market in southern Ontario, may already be having an impact. The Toronto Real Estate Board reported Monday that May sales were off 20.3 per cent from a year ago in the Greater Toronto Area while average prices dipped 6.2 per cent from April.
The QFREB published an economic analysis at the end of last month and noted the Canada Mortgage and Housing Corp. proportion of foreign buyers in Montreal was estimated at only 1.5 per cent.
Meanwhile, a Montreal thinktank says it’s time for B.C. and Ontario to reverse decisions on a foreign buyer tax on residential properties.
“While it’s arguable that foreign buying has had an impact on prices in the Vancouver area, the evidence is far less conclusive in Toronto,” wrote Mathieu Bedard, an economist with the Montreal Economic Institute, in a research paper published Tuesday. “A tax on foreign buyers is not a solution to our bad public policies.”
The group says the focus should be more on increasing supply. If anything, the group says, provinces should consider scrapping rent control rules if they want to boost the housing market because those controls make housing less profitable, discouraging investors and leading to less construction.
“I think the question is, does a foreign buyers tax really have an effect,” Bedard said. “We saw in Vancouver the market slow down after the tax and then start coming right up again. These types of taxes have no long-term effect. It’s only politicians trying to give the impression of taking care of problems and doesn’t affect the fundamental reason why prices are up and that’s a supply problem.”
Vancouver is now seeing prices and sales start to rise again after the province put in a 15 per cent tax on foreign buyers in August, 2016. Sales in Greater Vancouver in May jumped 22.8 per cent from April, while prices rose 8.8 per cent in May from a year ago and 2.8 per cent from April.
Bedard says Montreal doesn’t have the same supply problems as Toronto and Vancouver because it’s never had a similar greenbelt policy to restrict building of houses in and around the island. “Montreal also has a network of commuter trains and less restrictive policies except for rent control,” he said.