Photo: James Bombales
While the Ontario and BC housing markets have struggled to adjust to a new mortgage stress test which came into effect in January, one province has managed to largely bypass the policy’s negative impacts.
Quebec’s housing market has been having a banner year, as the province’s lower-priced homes represent an affordable option for buyers feeling the squeeze of stricter mortgage rules.
Montreal has had a particularly strong six months, posting month after month of growing sales and prices.
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“The affordability of Montreal’s housing relative to Southern BC’s largest cities and Ontario’s Greater Golden Horseshoe bestows a significant competitive advantage,” write Scotiabank economists Marc Desormeaux and Mary Webb, in a recent note.
The pair add that a booming job market and relatively balanced market conditions are to thank for the city’s strong performance.
“Balanced 2017–18 homeownership conditions in Montreal are reflected in a sales-to-new listings ratio only slightly breaching the 60 per cent threshold consistent with a seller’s market despite surging job creation,” they write.
The city’s rental market is also significantly cheaper than Vancouver’s or Toronto’s, making it an attractive destination for many of the country’s Millennials.
“Moderate monthly HPI growth generally between 4 per cent and 9 per cent across dwelling types over the same period further imply a balanced market,” they write. “Montreal’s rental vacancy rate near 3 per cent in October 2017 indicates a balanced rental market and contrasts with tight rates around 1 per cent in Vancouver and Toronto, and its rents averaged less than 60 per cent of those for the latter cities in 2014–17.”
The city’s affordability advantage is likely to continue in the coming year, even as prices continue to rise.
“Balanced home ownership and rental markets point to relatively modest near-term home price appreciation and rent increases for Montreal, reinforcing its housing affordability edge,” write Desormeaux and Webb.