Royal LePage sees Montreal residential property market cooling off this fall
“Essentially, what we’re forecasting is that prices are going to stay where they are for the rest of the year.”
After a torrid summer that saw Montreal outperform Toronto and Vancouver on the residential real estate front, look for cooler temperatures this fall.
Aggregate home prices in Greater Montreal will probably climb 9.5 per cent in the fourth quarter from a year earlier to reach $478,000, real estate firm Royal LePage said Wednesday. That’s down from the 12.5 per cent year-over-year increase recorded in the third quarter, according to the company’s data.
“Slowly, the market is starting to cool off a bit,” Dominic St-Pierre, Royal LePage’s vice-president and general manager for Quebec, told the Montreal Gazette in a telephone interview.
“The fourth quarter should show an increase relative to last year’s fourth quarter, but if we compare prices with those of the third quarter, they should be roughly flat. Essentially, what we’re forecasting is that prices are going to stay where they are for the rest of the year.”
Royal LePage’s aggregate home price includes a weighted average of all property types.
Montreal is coming off substantial price and unit sales gains as homebuyers rushed to buy property following the coronavirus-induced lockdown of March and April that temporarily froze the market. Two-storey home sales soared 58.9 per cent in the third quarter, while bungalow sales increased 30.5 per cent.
Half of Greater Montreal area neighbourhoods surveyed by Royal LePage posted double-digit increases in prices this past quarter.
Property prices in central Montreal jumped 12.2 per cent in the third quarter from a year earlier, topping Toronto’s 11.1 per cent climb and Vancouver’s 2.2 per cent advance, Royal LePage said. The average increase nationwide was 8.6 per cent.
Two-storey homes in Greater Montreal sold for a median price of $610,956 in the third quarter, a year-over-year increase of 13.9 per cent, Royal LePage said. Bungalows saw their median price jump 14.4 per cent to $381,607.
Gains were more muted for condominiums amid a surge in new listings. With about 73 per cent more condos listed for sale in Greater Montreal compared with a year earlier, median prices rose 8.6 per cent to $362,180 in the third quarter. In central Montreal, condo prices climbed 8.8 per cent to $448,496 as new listings soared 80 per cent.
Real estate transactions in recent weeks have benefited from pent-up demand caused by the lockdown. As the market reopened in May, many homeowners realized their property didn’t fit their needs, St-Pierre said.
“It became apparent for some people that if they had to spend more time at home, they needed a bigger place,” he said. “This generated a lot of demand for real estate.”
Persistently low interest rates and rising disposable income — a direct result of teleworking — have also fuelled transactions, the broker said.
“Collectively there’s more money available now, and many people decided to take this money and invest it in the property market,” St-Pierre said.
Still, with immigration slowed by the pandemic and foreign investment mostly absent, brokers such as Royal LePage warn the recent increase in available condos could start weighing on prices.
A gradual drop in government assistance — coupled with the end of mortgage payment deferrals — could also force some households to sell their property, thereby increasing supply in 2021, Royal LePage said.
“Demand for condos is still sustained, but there are a lot of properties being put in the market in central Montreal, which is boosting inventory,” said St-Pierre. “Central Montreal condos are the only type of property in Quebec where inventories are rising fast. This will have an impact on prices.”
To be sure, any slowdown still seems distant. As of Monday, Royal Lepage’s Montreal office had already reached about half of its October 2019 sales level, St-Pierre said.
“We’re still very busy,” he said.