The real estate market in the greater Montreal area was strong in the second quarter, with property prices up 4.8% over the year, according to a Royal LePage study released Thursday. The brokerage agency notes that the Bank of Canada’s key rate cut in early June has not caused an electroshock in the market… for now.
The median price of single-family homes stood at $681,300 in the Montreal metropolitan area (+5.8%), while the price of condominiums reached $465,800 (+0.9%).
Royal LePage says buyers entering the real estate market were motivated by expectations of lower interest rates at the start of the year. That demand, combined with low supply, pushed prices up 5.1 per cent year-over-year in the region in the first quarter of 2024.
The return of sellers in the following quarter helped increase supply and ease some pressure on prices, despite a first cut in the key rate in more than four years by the Bank of Canada, which took it from 5% to 4.75%.
“We still have the same problem”
“I can definitely see it” on the ground, says Marc Lefrançois, a real estate broker with Royal LePage in Montreal. Several sellers have told him they waited for interest rates to drop before putting their homes up for sale. “I felt like [l’activité sur le marché] “could pick up a little faster,” he said, but he still expects the market to gain strength in the coming months.
“If the Bank of Canada is able to lower it by a quarter of a point [de base de son taux directeur] at each meeting in July and September [et même lors des rencontres suivantes]it could give the market an electroshock,” he said. That said, the strength of demand could push prices even higher, he said.
On the South Shore, the agency measures a 9.3% increase in real estate prices compared to the second quarter of 2023. Laval (+4.8%) and the North Shore (+4.7%) experienced more modest increases.
Royal LePage is maintaining the forecasts made in its latest study on real estate prices in the greater Montreal area. The agency predicts that prices will increase by 8.5% in the fourth quarter of 2024 compared to the previous year, to approach $615,000.
“We still have the same problem,” says Mr. Lefrançois. “We have a major deficit between supply and demand” for housing. Moreover, he fears that government programs that support demand, such as the CELIAPP and the RAP, will worsen this gap. “The only solution to this problem is to stimulate construction.”
Elsewhere in Quebec
The agency noted strong demand in the Quebec capital, which, combined with insufficient supply, pushed up property prices by 10.4 per cent in the second quarter. “I was surprised to see that because Quebec City is often a more sluggish market than Montreal,” says Lefrançois. He attributes the increase to the city’s affordability, which has reportedly attracted buyers looking for affordable single-family homes.
In Trois-Rivières, the increase in property prices was 9.5%, and in Gatineau, 5.9%. Sherbrooke came out on top with a growth of 3.1%.
Royal LePage also believes that the increase in the capital gains inclusion rate on secondary residences and real estate investments from 50% to 66.7% in the calculation of taxable income had “limited” effects, not having observed a significant increase in listings before the measure came into effect.