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Montreal home prices expected to dip

Montreal home prices expected to dip

Montreal home prices expected to dip
 

The inventory of condos for sale in Greater Montreal is now up 24 per cent, with single family homes rising 17 per cent, compared with the same time last year.

Photograph by: John Mahoney , THE GAZETTE

MONTREAL — Montreal property prices could decline by up to five per cent during the crucial spring homebuying season, amid rising inventory and weaker demand from buyers, Royal LePage said Thursday.

Royal LePage said there is “now a strong possibility” that Greater Montreal home prices will decline between three to five per cent during the second quarter of 2013, before rebounding during the later months of the year.

Sales of Montreal homes fell by a larger-than-expected 25 per cent during the first three months of 2013, after rules on insured mortgages introduced last summer by the federal government continue to drive away first-time buyers, the report by Royal LePage said. By extension, the market has also slowed for houses and higher-end homes because repeat buyers are unable to sell their existing properties.

While Montreal home prices remained virtually flat during the first quarter of 2013, sellers now recognize that they will have to negotiate further with buyers to sell their homes, said Dominic St-Pierre, Quebec director of the national real estate services firm.

“The main reason why prices have not dropped yet in Montreal is because sellers have held on (to their homes),” he said. “Now the people who’ve had their homes on the market for six months are becoming a little more impatient to sell.”

During the first quarter, the median price of a Montreal condo rose 0.4 per cent, year over year, to $240,044, while the price of a standard two-storey home grew by 1.4 per cent to $392,929, Royal LePage said.

Nationally, average prices for three common types of housing — including condos, two-storey detached houses and bungalows — were up year-over-year in most Canadian markets, the report said.

But despite rock-bottom mortgage rates offered by lenders, March sales fell 17 per cent in Toronto and 18 per cent in Vancouver, compared with the same period in 2012, real estate boards in those cities reported this week.

“The combination of very low mortgage rates and flat home prices, against a background of general economic improvement across the nation, is not something we’ve seen before,” Royal LePage president and CEO Phil Soper said Thursday in a release. “Typically, one of these variables is moving hard in an opposite direction.”

Soper dismissed warnings of a housing bubble in certain Canadian markets: “The current environment is very supportive for housing.”

The Greater Montreal Real Estate Board is to report its sales figures for March on Monday. In 2013, Greater Montreal resales are expected to drop five per cent over 2012, while prices are expected to rise slightly this year, according to the Quebec Federation of Real Estate Board.

With Montreal buyers now able to choose from a wider selection of properties — condo inventory rose 24 per cent while single family homes were up 17 per cent, year over year — St-Pierre said he expects sales will be weaker this spring compared to an exceptionally strong second quarter homebuying season in 2012.

“We’re expecting sales to be down, but not by as much as in the first quarter.”

alampert@montrealgazette.com

Twitter: @RealDealMtl

The Canadian Press contributed to this report