As the rest of the Canadian housing market continues to struggle, Montreal is seeing some of its strongest housing activity in years. And, according to a new report from Scotiabank senior economists Marc Desormeaux and Adrienne Warren, that includes the highest level of home construction in over 20 years.
“Strong housing demand has boosted the pace of new construction to its highest level in at least two decades, led by purpose-built rentals and condominiums,” write the pair.
There were almost 25,000 housing starts in Montreal last year, the highest annual tally since 2005.
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“Activity has remained brisk in early 2018,” write Desormeaux and Warren. “Notwithstanding the sharp ramping up in new residential construction, there is little evidence of overbuilding in either the single-family or multi-unit segments. The inventory of completed and unsold new homes has edged lower since 2014 and is in line with historical averages.”
The demand for housing has been bolstered by strong job creation and increased immigration in the last two years. Overall sales this year are on track to surpass 2007’s record high, while average prices are predicted to continue to climb.
“Montreal home sales have been increasing steadily since 2014, with full-year 2017 transaction volumes up 8 per cent to their second highest level on record,” write Desormeaux and Warren. “Sales have continued to trend higher in early 2018…Montreal, alongside Ottawa, is among the few large urban markets in Canada where sales are higher than a year ago and are above their long-term average.”
Home prices have also reached record highs, as listings consistently fallen below the level of demand. The MLS benchmark house price for Greater Montreal rose 6.3 per cent year-over-year in April, the fastest appreciation since 2011.
“We expect further upward pressure on prices this year, given tight demand-supply conditions,” write Desormeaux and Warren. “The ratio of sales to new listings remains firmly in sellers’ territory at 67.5 in April…Market conditions have tightened across all property categories.”