The residential market in the Montreal region is showing signs of a growing bubble, warns the Professional Association of Real Estate Brokers of Quebec (APCIQ).
“We are indeed seeing the formation of the beginning of a real estate bubble in the greater Montreal area, which is characterized, on the one hand, by the inability of the majority of first-time buyers to acquire property and, on the other hand, , by the vulnerability of new buyers and experienced buyers, ”wrote the APCIQ in a press release published Tuesday morning.
The association is holding its virtual conference Window on the real estate market on Tuesday in which it presents its 2021 report and its 2022 outlook for the residential market in Quebec.
“Affordability issues have become critical in the Montreal region, especially for young households,” emphasizes the organization. Unless they plan to leave the metropolis, young households must increasingly fall back on condominiums and put an end to the plan to purchase a single-family home in the census metropolitan area of Montreal, especially those who do not. ‘do not have access to support from their families. The less well-off and the less mobile among them capitulate and remain in the rental market, cutting off as many transactions on the resale market. ”
The affluent single-family home segment is particularly at risk of a price correction if economic conditions deteriorate. However, the APCIQ believes that the rise in interest rates expected in 2022 is timely to avoid the inflation of the bubble and its unwanted excesses.
“This interest rate hike comes in time to defuse the formation of a bubble in the greater Montreal area,” suggests Charles Brant, director of the APCIQ’s Market Analysis Department. Rather, we will see a stabilization, or even a correction, in several sectors, especially those in the higher price ranges. ”
PHOTO PROVIDED
Charles Brant, Director of the Market Analysis Service of the APCIQ
The median price of a home in the Montreal area now stands at $ 493,460, up 45% since 2019. The rise in the median price will finally slow in 2022. The APCIQ forecasts a median price just below the half a million mark, to $ 498,395, which would represent a price increase of just 1%.
For Quebec as a whole, house prices gained 23% in 2021. The median price is $ 363,000. Next year, an increase of 3% is expected, to $ 374,000.
For the APCIQ, the residential market will go from the overheating, which characterized it in 2021 to a kind of forced normalization in 2022, by the announced rise in interest rates.