If you’ve been putting off buying a house in the last year or so, you now could be paying tens of thousands more for the same type of property.
If you’re thinking of getting into the market to buy a house, you should know: Waiting could cost you. Prices in Montreal have been rising steadily during the past few years, and the momentum doesn’t seem to be slowing.
According to Royal Lepage’s most recent House Price Survey, prices were up 5.9 per cent this fall over last year in Greater Montreal and seven per cent in the city centre.
While that doesn’t sound like much relative to the double-digit increases seen in Vancouver and Toronto in recent years, it’s no chump change. The median price of a home in Montreal centre is now $532,026, which is $35,000 more than last year. In the Greater Montreal area, it’s $418,731, or a difference of $23,000.
In other words, if you’ve been putting off buying a house in the last year or so, you now could be paying tens of thousands more for the same type of property.
For many Montrealers, the logical solution is to look to the suburbs for cheaper housing. Not surprisingly, the exodus is now resulting in record sales and higher prices there, too. In Montreal East, prices in the third quarter of 2019 increased by 8.5 per cent year-over-year, and the price of two-storey homes in the region jumped 11.3 per cent.
Buyers who are shopping beyond city limits aren’t just looking at white-picket-fence properties either. Sales of suburban condos are increasing, and prices are following. Laval posted the greatest increase in condo prices in the third quarter of 2019, at 6.8 per cent. Condo prices were also up by about five per cent in Montreal East and the South Shore.
There’s still no major city in Canada with more affordable real estate than Montreal. Yet the steady rise in real estate prices is having a real impact on how much local buyers can afford.
Federal and provincial governments are touting a range of potential solutions to help more Canadians become homeowners, but Dominic St-Pierre, director and vice-president at Royal LePage Québec, said these well-intentioned initiatives will only fuel even greater increases in house prices here in Montreal.
We really think they’re looking at the wrong problem. The solution is construction.”
Strong economic fundamentals are giving more Montrealers the confidence to buy or upgrade their homes, St-Pierre said, but the pool of available homes is rapidly shrinking, which is driving up prices. The number of properties for sale in the Greater Montreal region has been dropping for 48 consecutive months. In September, there were 21 per cent fewer properties for sale compared with last year.
Offering longer mortgage terms and financial incentives for first-time buyers will stimulate demand in a market that already has extremely low inventory, he pointed out. More buyers vying for fewer houses for sale is not going to make housing more affordable in the long term.
“We really think they’re looking at the wrong problem,” St-Pierre said. “The solution is construction.”
But according to the APCHQ, an industry group representing the residential construction sector, although there was more residential construction in the first half of 2019 than we’ve seen in Quebec since 2010, more than half of the new housing units were rental apartments.
In Montreal, there were 44 per cent fewer owner-occupancy homes under construction, and four per cent fewer condo units. Rental apartment construction, on the other hand, increased by 127 per cent.
Looking ahead to the winter, Royal LePage predicts Montreal real estate will outperform that in other major Canadian cities. Projections are that the year-over-year price increase in Montreal will remain at about six per cent, compared with 1.5 nationally. The report anticipates an increase of three per cent in Toronto and a decrease of 5.5 per cent in Vancouver.
Despite the gains in prices here in recent years, the aggregate price of a home in Canada is still 50 per cent higher than in Montreal, according to the national price summary.