Ontario home sales continued to falter in April, driven by a steep decline in the GTA, as many industry experts wondered when the market would begin to adjust to the effects of a new mortgage stress test introduced earlier this year. But as housing markets across the country continue to struggle, one province has managed to come out on top.
“The [Quebec] market remains under pressure…with average annual prices up 4.5 per cent since the start of 2018,” writes Desjardins senior economist Helen Begin, in a note released today. “The number of sales in the first months of 2018 compared with the same time last year is positive in Quebec and very negative in Ontario.”
Begin notes that average prices in Quebec are up in each of its six major housing markets, with a particular boost in Montreal.
“The acceleration in Montreal is behind the rapid rise in average prices across the province,” she notes. “An insufficient number of single-family homes for sale in Montreal…to meet demand has created a shortage, putting pressure on prices.”
According to Begin, demand for condos in Quebec is much stronger than what Desjardins had expected. In 2018, 49,000 condo starts are expected in the province, a boost from the originally anticipated 46,000.
But the market won’t be able to avoid the effects of the stress test forever. Begin writes that it, along with rising interest rates, should cool activity in the coming year.
“The downstream effects of rising interest rates and stricter rules for new mortgage loans will affect [the new condo market] more than others,” she writes. “In 2019, demand for all types of dwellings should cool and new construction will adjust accordingly.”