Montreal housing in ‘Goldilocks’ status as hot markets cool
City’s home prices forecast to experience biggest jump since 2010 as demand rises
While the once-soaring housing markets in Toronto and Vancouver are showing signs of cooling, Montreal is just getting started.
Demand in Canada’s secondlargest city has heated up enough to put Montreal-area home prices on track to rise six per cent this year, the biggest jump since 2010, according to the Quebec Federation of Real Estate Boards. That’s up from a January forecast of just one per cent growth. Job creation, robust consumer confidence and new immigrants are fuelling demand.
“We aren’t as crazy as Vancouver and Toronto as far as price increases,” said Eric Goodman, agency executive at Century 21 Vision in Montreal. “But activity is pretty good.”
Montreal’s real estate market so far has been left out of the global spotlight focused on the booming property markets of Toronto and Vancouver. That could change as foreign-buyer taxes in those cities curbs demand and potentially sends purchasers looking for a cheaper place to invest.
“I wouldn’t be surprised if Montreal becomes the new target for foreign capital investing in residential real estate,” said Cynthia Holmes, a professor of real estate management at Ryerson University in Toronto. “Montreal is the Goldilocks of the Canadian housing market,” she added, with Toronto and Vancouver too hot and Calgary too cold.
There are early signs of new interest in Montreal. The city has attracted “a bit more” Asian investors since a 15 per cent foreign buyers tax was implemented in Vancouver in August, according to David L’Heureux, Canada Mortgage and Housing Corp. principal of market analysis for the Montreal region. “At the moment I don’t think it has a significant impact on demand,” he added.
Non-Canadian purchasers in Montreal made up about 1.3 per cent of the market last year, up from 0.7 per cent in 2013, according to CMHC. “We expect the number to remain close to 1.5 per cent in the short term,” L’Heureux said.
That compares to a Toronto Real Estate Board estimate of fewer than five per cent of foreign buyers last year in its region, where demand slowed after policy-makers introduced a foreign buyers levy last month.
Foreigners accounted for as much as 16.5 per cent of the value of property sold in the Vancouver region before British Columbia imposed a tax in August, according to the province. That figure fell as low as 1.8 per cent in September, though has crept back up.
While growth has slowed in both Toronto and Vancouver, the median price of a single-family home in Montreal is seen climbing to $312,500, faster than last year’s two per cent gain and the one per cent increase predicted earlier. Montreal remains a bargain, with average prices about one-third the levels in Toronto and Vancouver.
Montreal also is on track to break a seven-year record for number of homes sold, with 41,500 properties expected to change hands, up four per cent from last year, according to the Quebec board, which in January predicted a five per cent decline.
While the effect of the Toronto and Vancouver taxes remains to be seen in Montreal, a six per cent rise in home prices “is not problematic for now,” Quebec real estate board market analysis manager Paul Cardinal said.
“It’s still cheap to buy a house in Montreal compared to other major markets in Canada, but activity has been higher than we thought it would be this year,” Cardinal said. It’s “too soon” to predict if the city may be on the verge of its own housing boom.
Unlike Toronto, or Vancouver — popular with Chinese immigrants and others drawn to the Pacific Northwest — Montreal has a solid supply of housing to meet demand, including in the rental market, according to Cardinal.