Photo: James Bombales
The Montreal housing market has been posting record sales numbers for months, and July was no exception. But according to two economists, the market could be close to overheating.
“The resale market is doing well across Quebec. It is particularly lively in the Greater Montreal area,” write Desjardins economists Francois Dupuis and Helene Begin, in a recent note. “Transactions are rising, and activity in July was the strongest it has been in that month in eight years.”
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The pair note that the city’s housing inventory is rapidly shrinking, putting pressure on prices amid record demand.
“The annual increase in prices is around the 5 per cent mark on the island, a pace not seen for many years,” they write. “According to the CMHC, the ratio of sales to new listings in Montreal puts the market close to overheating, making the housing market more vulnerable to a potential correction.”
They also note that the city’s condo market is particularly hot, as buyers rush to purchase the relatively affordable property type.
“The [condo] resale market has firmed up a lot in most parts of the island and can no longer meet demand, which is primarily coming from Quebec buyers,” they write. “The number of unsold completed new condos downtown remains low for now, at approximately 100 units.”
The median price of a condo grew by 3 per cent in the second quarter of 2018, and now sits at $322,509.
“Residential sales in the Montréal CMA have been increasing for four years now,” wrote GMREB Board of Directors president Mathieu Cousineau, in a recent statement. “This sustained pace of sales, combined with the steady decline in the number of properties for sale, gives sellers an increasingly advantageous position in negotiations.”