The overbidding on the real estate market combined with the rise in interest rates and galloping inflation should reduce demand from buyers in the coming months, in Montreal as elsewhere in the province. A situation that could lead to a slowdown in price growth, or even a decrease in them, according to two experts consulted by The duty.
In the greater Montreal area, as in the rest of the province, a downward trend in residential sales is confirmed. In the metropolis, these fell by 13% in the second quarter of the current year compared to the same period in 2021, when sales had been inflated by the exodus to the suburbs in the pandemic context, according to news data from the Professional Association of Quebec Real Estate Brokers (APCIQ) released Tuesday.
Despite this slowdown in demand, the median prices for single-family homes and condominiums continued to climb, by 15 and 14 per cent respectively, during the period studied. “There is still a lot of overbidding on the market, especially in the centers that are the most overheated, such as Montreal, Gatineau and most of the outlying regions of the Montreal region”, thus notes in an interview the director of the service of market analysis at the APCIQ, Charles Brent.
“There is a marked slowdown in activities, but which is not yet affecting prices,” also notes Marc Lefrançois, who is a real estate broker for Royal LePage. The company thus indicates, in an analysis published Wednesday, that the price of properties in the greater Montreal area should increase by 12.5% by the fourth quarter of 2022, compared to the same quarter of 2021. This variation does not is however only 2.5% between the first quarter of 2021 and the same period this year.
The tide could be turning in favor of buyers, in an inflationary environment that should prompt the Bank of Canada to raise its key rate by 0.75% on Wednesday. “We are approaching some price stabilization,” believes Mr. Brent, who believes that the upcoming interest rate hike “will really have a slowing effect on the real estate market.” In the greater Toronto and Vancouver areas, Royal LePage has also revised downwards its forecasts for price increases between the fourth quarter of 2021 and the end of the current year, which go from 16, 5% to 3% and 15% to 5%. All in a context where “the easing of demand has led to a decrease in prices on a quarterly basis”, indicates a press release from the real estate agency obtained under embargo.
Flexibility
Thus, buyers can hope to have more leeway in their efforts to acquire their future property. “Above a million [pour l’achat d’une propriété], we really feel a net slowdown” in demand, confirms Mr. Lefrançois. “Instead of having 40 visits, we have seven or eight,” which limits the risk of overbidding, he says.
According to Mr. Brent, property prices could eventually decrease by 5 to 15% in the Montreal area and “certain resort markets”. “It is not impossible that we will see a slight drop in prices,” also notes Marc Lefrançois, who however expects a “stable market” in Montreal, at least in the short term.