Montreal property sales seen losing steam, but high prices to persist: CMHC


“For condos, single-family homes and small rental buildings, it’s a sellers’ market. The market is growing tight for all products.”

Article content

Montreal’s residential property market is projected to lose some momentum over the next two years, but that probably won’t be enough to halt price hikes amid persistently low listings.

Advertisement 2

Article content

Following increases of 17 per cent in 2020 and 18 per cent last year, average home prices in the Montreal area could rise another 10 per cent this year to a range between $605,000 and $640,000, the Canada Mortgage and Housing Corp. said Thursday in its 2022 market outlook. Based on the midpoint of the projected ranges, average prices could climb another 5.2 per cent next year and 3.8 per cent in 2024, CMHC also said.

Article content

“We expect price growth to decelerate in the coming months, but it’s still going to be an important price increase,” Francis Cortellino, CMHC’s senior economist for the Montreal market, said Thursday in a telephone interview. “For condos, single-family homes and small rental buildings, it’s a sellers’ market. The market is growing tight for all products.”

Advertisement 3

Article content

After several years of rising prices, access to home ownership “is more difficult now than it was before,” Cortellino added. “There’s not a lot of affordable products on the market. For a lot of renters, given their income, it would be difficult to buy a single-family home in the Montreal region. This is why we can expect a decrease in sales.”

Article content

Higher borrowing costs also figure to weigh on housing demand. The Bank of Canada last week raised its benchmark interest rate by half a point to one per cent and promised further increases this year in a bid to ward off soaring inflation. The move represents the biggest single hike in borrowing costs since 2000.

Article content

And with fewer homes being listed for sale in Greater Montreal, CMHC is projecting property sales will drop this year and in each of the next two years.

Advertisement 4

Article content

Between 47,250 and 52,250 Montreal-area homes could be sold this year, CMHC said. That’s a decline from last year’s 54,439.

“For the last few months, we‘ve been seeing a decrease in the rhythm of sales,” Cortellino said. “If we add the mortgage rate increases along the way, we can expect that sales will be lower in 2022 than in 2021.”

Despite the projected price increases, Montreal remains cheaper than major Canadian markets such as Toronto and Vancouver. Prices for the average Canadian home should range between $740,700 and $782,400 this year, a notable increase from 2021’s $687,990, according to CMHC’s forecast.

Rising prices across Canada partly reflect the fact there simply aren’t enough properties available to meet the demand. Canada would need to build an additional 1.8 million homes just to reach the average per-capita housing stock levels of the Group of Seven industrialized countries, according to Bob Dugan, CMHC’s senior economist.

Advertisement 5

Article content

“Despite the pace of housing starts, the housing stock is too low, and the pace of new home construction forecast over the next several years will not be sufficient to rectify the shortfall,” he told reporters Thursday. “Much more housing supply is needed.”

In fact, as interest rates and house prices continue to rise, “home ownership might move out of reach for many aspiring homebuyers,” he said.

Based on the annual rate of housing starts, it would take Canada 36 years to erase the current housing shortfall, Dugan added.

 “It’s a large challenge to alleviate that supply shortage in Canada,” he said. “It’s going to require some innovative approaches to the problem.”

[email protected]

Advertisement 1


Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Source link

Leave a comment