New mortgage rules and interest rate hikes have put made it even harder for Canadian buyers to afford homes in overvalued markets. Now buyers are looking for alternatives, and Montréal is emerging as the number one option for many.
- Montréal residential sales will outpace Vancouver and Toronto
- Canada’s new foreign buyer tax does not apply to Montréal
- New mortgage rules are pushing people towards more affordable markets
Canada’s housing market has been making headlines all year, with cities like Toronto and Vancouver boasting median home prices over $1 million. Some Canadian markets have become so unaffordable, however, that the government felt pressured into taking a series of actions to cool the housing market.
Interest rate hikes, the new foreign buyer tax, and expanded stress tests for mortgage qualification are forcing buyers to seek affordable options. Montréal is attracting many of those buyers with its lower prices point of $300,000.
“Residential sales in 2018 will increase more significantly in the Montréal metropolitan area. In 2018 we expect the increase to be in the order of 5 percent,” says a recent report from the Quebec Federation of Real Estate Boards (QFREB).
Montréal is an attractive option because it is affordable and its job market is growing fast. The foreign buyer tax does not affect Montréal either, which makes it appealing to foreigners and investors.
“For the first time in history we should surpass 45,000 sales in the city [in 2018],” writes QFREB market analyst Paul Cardinal. “The condominium segment should be particularly strong.”
Prices in Montréal are expected to grow alongside sales. According to the QFREB, the average home price will spike around 5% to $322,000. Condo prices are forecast to rise 3% to $255,000.
“In terms of prices, growth will be stronger in Montréal [than in the rest of the province]…as it currently has the tightest market conditions,” reads the QFRED report.
“It is a seller’s market for single-family homes and multiplexes, while conditions are more balanced for condominiums. The result is more upward pressure on prices and faster selling times.”