Posted at 11:09 a.m.
Updated at 1:00 p.m.
The rise in interest rates had the effect of a cold shower on the overheating of residential real estate in Quebec, according to data from the Association professionnelle des courtiers immobiliers du Québec (APCIQ). The trend is likely to continue for the next year, adds an economist from Desjardins Group.
Whether it’s the decline in the number of properties sold, the increase in supply (number of listings), longer times to find a buyer or the decrease in prices compared to the peak of April, the main indicators point towards a slowdown in the residential real estate market, which had experienced overheating in 2021 and at the start of 2022.
The number of sales in Quebec fell 18% in the third quarter, compared to the same period last year, to 18,146 transactions, according to data from the APCIQ. The figure is below the pre-pandemic average for a third quarter.
This is a major change of course since April, says Hélène Bégin, senior economist at Desjardins Group. “Sales have nevertheless fallen considerably, quite quickly, due in particular to the rise in mortgage rates, which has accelerated. It confirms what we anticipated a few months ago. The market is cooling down quite drastically. »
The trend is likely to continue for the next few months while the Bank of Canada has not finished raising its key rate, anticipates Mme Begin.
The full effect of the rise in interest rates has not yet been felt, it is only the beginning of a period of correction for the residential real estate market, which had experienced, it must be said, excesses important during the pandemic.
Hélène Bégin, senior economist at Desjardins Group
The economist predicts that prices will continue to fall “until the end of 2023”. “The reason is simple: there are far fewer buyers who are able to take out a loan to buy a property. Those who are able to get a loan, often the amount is not necessarily enough to take action immediately. »
“There are fewer potential buyers, people are more cautious and that means the market will continue to correct,” she adds.
Different from region to region
The APCIQ data show that the situation is different from one region to another, underlines the economist.
Activity experienced the strongest slowdowns in regions where the phenomenon of overvaluation was the most significant. Sales fell by 23% in the greater Montreal area and by 19% in the Gatineau area. In Quebec, the decrease is 9%, while activity is down 15% in the Sherbrooke region.
In comparison, activity remained stable in Trois-Rivières and Saguenay (0% and 1%, respectively).
Single-family homes and plexes
Real estate prices are also down from their all-time high reached in the second quarter, from April to June. The median price of a single-family home fell by nearly 10% for the period including the months of July, August and September, compared to the previous three months, dropping from $448,694 to $400,000. The median price is still 10% higher than at the same time last year.
The decrease in the number of transactions is more pronounced in the condominium and plex segment, which respectively recorded a decline of 25% and 34% compared to the same period last year. The decline is only 13% for single-family homes.