According to the Royal LePage House Price Survey released today, the Greater Montreal Area showed continued vitality in the first quarter of 2019, recording the highest appreciation rate among Canada's three largest metropolitan areas at 5.5 per cent, reaching an aggregate year-over-year price of $406,332.
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In line with the Greater Montreal Area, Montreal Centre again remained resilient with an 8.1 per cent year-over-year aggregate home price increase in the first quarter of 2019, positioning itself as the most vigorous market among the country's largest top three cities surpassing the Greater Toronto Area (3.4 per cent) and Greater Vancouver (-1.5 per cent).
Despite the breakthrough, the Greater Montreal Area still has a much lower aggregate price than the other metropolitan regions at $406,332 (versus $836,425 and $1,239,306 in the Greater Toronto Area and Greater Vancouver, respectively).
Attracting families in search of a larger living space and better quality of life, two-storey homes (the segment with the lowest supply in the region) saw the largest increase in the Greater Montreal Area, at 6.4 per cent year-over-year, reaching a median price of $514,412.
Even though the condominium market became favourable to sellers a year ago after several years of surplus inventory, this segment continued to appreciate, rising 5.2 per cent to a median price of $328,488.
In Montreal Centre, the price of condominiums is poised to climb above the $400,000 mark ($396,942).
Finally, the median price a bungalow in the Greater Montreal Area reached $316,159 in this quarter, a more moderate 3.7 per cent increase over the previous year.
With a residual unemployment rate of 5.3 per cent in the province2 and 7.3 per cent in Montreal3, the city is reaping the benefits of its economic performance.
Montreal International reports a record high in the number of international students in the city's universities, due to the area's strong reputation in post-secondary education, its affordability and dynamism.4 The organization also signals that the specialized workforce, including those in technology (an investment pillar in the region) doubled last year.5
Another sign of the city's economic vitality: Montreal (with about one-third of Vancouver's median price) channels more transactional volumes than the latter.
Montreal Centre and the South Shore saw two-storey home prices increase the fastest, rising 11.8 per cent and 7.2 per cent, putting their median prices at $739,032 and $462,497, respectively.
Bungalows are popular in the East, with their median price rising 7.9 per cent to $372,500.
Condominiums saw notable price increases for the top three areas: Montreal East (8.3 per cent), the North Shore (6.9 per cent), and the South Shore (6.4 per cent).
The centre of the island maintains a healthy appreciation rate of 4.7 per cent and still reflects the highest prices in the condominium market.
It should be noted that the condominium market in West Montreal is the only area to show a year-over-year price decline (-2.8 per cent) across all property types surveyed this quarter.
Sales6 in the Greater Montreal Area saw a 3.3 per cent increase year-over-year in the bungalow segment, while increasing 1.3 per cent in the two-storey category during the first quarter of 2019.
During the same period, condominium sales saw an 8.9 per cent increase.
While the last several quarters had defined Montreal West and Centre as the most active areas, sales during the first quarter of 2019 observed a correction benefitting the eastern part of the city and an even greater sales growth on the South Shore and North Shore.
Sales this quarter dipped 9.3 per cent and 1.6 per cent in Montreal West and Centre, respectively, climbing between 10 and 11 per cent on the North Shore and South Shore.
This correction is explained by a strong demand for properties in more affordable neighbourhoods, with Montreal West and Centre remaining by far the most expensive ones in the Greater Montreal Area.
For the second quarter of 2019, Royal LePage expects the median price of homes in Montreal to increase by 1.6 per cent.
Strong demand combined with an ever-decreasing inventory is likely to keep prices high, which should slightly reduce the increase in sales over the rest of the year.
City of Montreal measures that will soon require 20 per cent social and family housing in buildings with more than 100 units may increase the price per square foot for adjoining dwellings, possibly restricting demand and impacting the resale market.
Other cyclical factors may, however, have a positive impact on sales: while the Bank of Canada's key rate will remain stable at 1.75 per cent for the foreseeable future, the federal budget's home buying incentives could encourage first-time buyers.
Affordability and incentives to borrow should support demand, particularly in a market like Montreal that offers a good selection of listings within the new measures price range.
With a cumulative CMHC loan cap of a $480,000 (for households with combined incomes below $120,000), Montreal is positioned to see a boost in sales activity when measures get implemented, especially with prospective first-time buyers who had been sidelined from the market in recent quarters with significant home price increases in the region. ■