Real estate resale may have posted a 12e decline in 13 months as well as a record decline in November, nothing helps. Market conditions are still favorable to sellers, while access to property has never been so restricted in 40 years.
According to November data collected on the Centris network by the Association professionnelle des courtiers immobiliers du Québec (APCIQ), the census metropolitan area (CMA) of Montreal saw residential sales drop 38% last month compared to November. 2021. It is necessary to go back to November 2014 to observe such a low level of transactions, it is said, to add: “this annual drop, for the month of November, is the largest recorded since the Centris data are compiled [2000] “.
It was -12% in Saint-Jean-sur-Richelieu, but -33% for the North Shore, -39% for the South Shore and -41% for Laval and the island of Montreal.
For the period from January to November, compared to the same period last year, transactions fell by 21% in the Montreal agglomeration. By way of comparison, the drop in sales is 11% for the greater Quebec City region, and 19% across Quebec.
Since October 2021, when the trend began, home sales have fallen by 37.4%, and they are now “at their lowest level since January 2015”, writes Daren King, an economist at the National Bank. Be that as it may, “the number of new property listings tends to want to drop again in November, which indicates that potential sellers are not rushing to sell their property, or even do not feel still have to do it,” says Charles Brant, director of the APCIQ’s market analysis department.
Price stabilization
As a result, in November, median price conditions stabilized after a downward adjustment since the spring. The median price decreased by barely 1% for single-family homes ($520,000) and plexes ($715,000) compared to November 2021, while it increased by 2% for condominiums ($380,000). For the period from January to November, compared to the same period last year, median prices posted, on average, an increase of 13% for single-family homes, 11% for condominiums and 9% for small properties. to income.
Residential real estate is undergoing corrections after the pandemic outbreak, but it is still showing relative price resilience which, combined with the strong 350 basis point push in the Bank of Canada’s key rate since March, explains that “affordability conditions in Montreal have never been so restrictive in 40 years”, adds Daren King. Added to this is the rise in all the other costs associated with owning a property.
In a previous study, National Bank pointed out that in the third quarter of 2022, housing affordability in the Montreal area had deteriorated for an eighth straight quarter and had reached its worst level since the third quarter of 1981. On an annual basis, house prices in Montreal increased by 14.3%, which certainly represents a moderation compared to the previous quarter, but remains higher than the urban composite index (+11.6%) and than the 20-year average for this indicator (+7%). Compared to the strong shocks felt during the 1980s, the current phase of decline in accessibility is not yet as long as that of 11 quarters spread out from 1986 to 1989, but it exceeds it in its magnitude, with a plunge of 25.5 percentage points, compared to 20.2 points, makes the institution stand out.
48 months of savings
Thus, at the end of the third quarter, it was necessary, on average, to accumulate savings for 48 months to accumulate the minimum down payment for the purchase of a representative property in the greater Montreal area — at the savings rate of 10% on a median income before tax —, against an average of 27 months since 2000. That is 33 months for a condominium and 57 months for a single-family. In the Quebec agglomeration, it took nearly 29 months, compared to an average of 20 months since 2000, or 20 months for a condo and 30 for a single-family.
All properties combined, the mortgage payment as a percentage of income exceeded 49% in Montreal, against an average of 30% since 2000. It was 32% in Quebec, against a historical average of 23%.
Same reading for the Desjardins Affordability Index, which contracted in the third quarter to extend the decline that began in the second quarter of 2020. “Once again, the financial capacity of households to acquire a property has reached a low record in several CMAs”, reaching its lowest level since 2006 for almost all of them. The decline in the index in the third quarter was more pronounced in Quebec than in Ontario and than in Canada, due in particular to the less marked drop in the average selling price here during this quarter, explains Desjardins.
“Although the current rise in interest rates is expected to end, they will remain high for some time. In this context, access to property will remain difficult. »