The residential market in the province of Quebec stood out from the other Canadian provinces
Montreal, January 23, 2020 – At the first edition of its Fenêtre sur le marché immobilier conference, the Quebec Professional Association of Real Estate Brokers (QPAREB) presented its review of 2019 and unveiled its outlook for the 2020 residential real estate market in the Montreal Census Metropolitan Area (CMA) and the province of Quebec.
1. MONTREAL CMA
1.1 REVIEW OF 2019 | MONTREAL
In 2019, a record number of 51,329 residential sales were concluded in the Montreal CMA, which represents a 10 per cent increase compared to 2018. This was the fifth consecutive annual increase of more than 5 per cent, for an annualized average of 6.9 per cent since 2015. “The performance of the Montreal real estate market in 2019 was the reverse of what had been anticipated 12 months ago, in a context where interest rates were expected to rise,” said Charles Brant, economist and director of the QPAREB’s Market Analysis Department.
All three property categories registered an increase in sales in 2019. Condominium clearly stood out for a fourth consecutive year, registering a 14 per cent increase in transactions. Sales of plexes (2 to 5 dwellings) and single-family homes rose by 10 per cent and 7 per cent, respectively.
All of the main geographic areas of the Montreal CMA registered an increase in sales in 2019, particularly the large areas on the periphery of the Island of Montreal. Saint-Jean-sur-Richelieu had a remarkable comeback with a 21 per cent jump in sales, followed by the South Shore (+15 per cent), the North Shore (+14 per cent), Laval (+13 per cent) and Vaudreuil-Soulanges (+6 per cent). Sales on the island of Montreal (+4 per cent) lagged behind the suburbs.
It should also be noted that there was a strong demand for high-end properties in the Montreal area, as sales of condominiums above $1 million jumped by 33 per cent (221 transactions) and sales of single-family homes above $1.5 million increased by 12 per cent (368 transactions).
Listings and market conditions
On average and for the Montreal CMA as a whole, the QPAREB registered 18,482 active listings in 2019, a sharp decrease of 19 per cent compared to 2018. This was the fourth consecutive annual decline in active listings.
“The real estate market in the Montreal CMA continues to stand out from that of the rest of the province,” said Mr. Brant. “In addition to registering record sales in 2019, selling times were down sharply and price increases were sustained. By property category, condominiums stood out most in terms of the number of transactions, but plexes registered the largest price growth,” he added.
The phenomenon of sales above the asking price and multiple offers was also very present in the Montreal area in 2019. “Sales concluded above the asking price increased in certain areas and became more widespread in the Montreal CMA for all three property categories,” noted Mr. Brant. “Condominiums are increasingly exposed to situations of multiple offers, with sales being concluded at a price higher than the asking price. This phenomenon has become increasingly prevalent in the large areas on the periphery of the Island of Montreal and has even become endemic in many neighbourhoods on the Island of Montreal,” he added.
We also note that the territory of the greater Montreal area continues to expand. The QPAREB has observed a strong resurgence of transactions in agglomerations located within an hour’s drive of the Island of Montreal, such as Joliette (+31 per cent), Sorel-Tracy (+28 per cent), Granby (+26 per cent) and Drummondville (+25 per cent). “This surge is consistent with an exodus of households working in the Montreal CMA to less expensive markets that offer interesting services so that they can establish a residence there,” added the QPAREB economist.
Overall, the year 2019 ended clearly in a seller’s market for single-family homes, condominiums and plexes. The scarcity of supply of single-family homes compared to demand is undeniable on the Island of Montreal as well as in the large outlying areas, where the amount of time needed to absorb the inventory of properties is approximately 4 months. The South Shore stood out with slightly more than 3 months of inventory, which is lower than the number of months of inventory on the Island of Montreal (3.6) and makes it the tightest market in the Montreal CMA.
Condominiums continued to display tense market conditions, falling from 10.5 months of inventory to 3.1 months between 2016 and 2019. Market conditions now give sellers the upper hand in negotiations, and a state of overheating was observed for this property category, along with an acceleration in price growth.
Price growth maintained a good pace in 2019: the median price of single-family homes ($340,000) increased by 6 per cent. After the 7 per cent increase that was registered in 2017, this was one of the largest price increases in 10 years.
The median price of condominiums stood at $267,900, an increase of 5 per cent compared to 2018. This was up compared to the 3 per cent increase that was registered in 2018 and was the largest increase since 2011.
PLEXES (2-5 dwellings)
The median price of plexes reached $550,000 in 2019, a 7 per cent increase. This was a strong increase and similar to the 8 per cent rise that was registered in 2018.
1.2 2020 FORECASTS | MONTREAL CMA
The QPAREB predicts that the residential real estate market in Montreal will continue to be dynamic in 2020 and that it will once again outperform the province as a whole, due in particular to more sustained population growth resulting from a positive net migratory balance supported by non-permanent residents.
“The number of transactions in the Montreal CMA will reach a new high of 54,600 sales in 2020,” said Mr. Brant. “Price growth will also be stronger there than elsewhere in Quebec. We anticipate a 6 per cent increase in the median price of single-family homes, which should reach $360,700. For the condominium segment, whose market conditions have tightened dramatically over the past two years, we expect the median price to increase by 6 per cent, reaching $285,200, in a context where the pace of construction activity is slowing down for both single-family homes and condominiums.
2. PROVINCE OF QUEBEC
2.1 REVIEW OF 2019 | PROVINCE OF QUEBEC
For a third consecutive year, the province’s real estate market registered record-setting sales in 2019, as more than 96,500 transactions were concluded through the real estate brokers’ Centris system.
“With a 12 per cent increase in sales, Quebec’s residential market stood out from other Canadian provinces for a fifth consecutive year, with exceptional strength and impressive consistency,” said Mr. Brant.
Strong job market performance, rising disposable income, a high consumer confidence level and the keeping of interest rates at historically low levels supported the strong demand on the province’s residential real estate market. “This was enhanced by demographic conditions that were greatly boosted by migratory flows, which increased further in 2019, benefiting not only the Montreal CMA but other CMAs as well, such as Quebec City and Gatineau,” added Mr. Brant.
It should be noted that, unlike the rest of the province, which is solidly in a seller’s market, the Quebec City and Saguenay CMAs are currently in a buyer’s market. “Market conditions are improving gradually in Quebec City, which has been expected for several years in this region,” said Mr. Brant. “All signs were there in 2019 to indicate that an upturn in sales is well underway in Quebec City’s residential real estate market.”
The Montreal, Gatineau, Saguenay, Quebec City and Trois-Rivières CMAs registered significant increases in transactions that often exceeded 10 and 15 per cent, and even close to 25 per cent in some cases, for all property categories combined. Condominiums stood out with a 16 per cent increase in transactions in all of the province’s CMAs, compared to a 9 per cent increase in sales for single-family homes.
2.2 2020 FORECASTS | PROVINCE OF QUEBEC
Factors such as full employment, rapid growth in disposable income, high levels of consumer confidence, government incentives for homeownership and ongoing very low interest rates will continue to stimulate residential sales this year. However, an anticipated slowdown in global economic growth combined with labour shortages in the province could have a negative impact on job creation and prevent Quebec’s economy from operating at its full potential.
The QPAREB predicts that the year 2020 will start off strong for the resale market, but that activity will slow somewhat in the second half of the year. The sustained pace of price increases will further reduce the pool of first-time buyers who are ready to take the plunge, despite government incentives, and will deter experienced buyers from selling their property. The prospect of an increase in condominium fees resulting from the adoption of bills 16 and 141 could also negatively affect the vitality of the condominium market. However, Quebec will still benefit from very positive migration flows as the province is positioning itself favourably as a place of work and residence, which will maintain strong real estate market growth in the CMAs that are most exposed to it.
“In this forecast scenario, the QPAREB predicts a 6 per cent increase in the number of transactions in 2020, reaching 102,700 sales,” said Mr. Brant. “This will be the first time that the 100,000 transaction threshold will be surpassed in the province. The median price of single-family homes is expected to increase by 5 per cent, to reach $272,900, in a context where market conditions are particularly tense in the Montreal and Gatineau CMAs and are expected to become seller’s markets in other CMAs and agglomerations,” he added.