Montreal home resales decline for third straight month
Experts say they expect the pace of new housing to decline through the rest of this year. Quebec and Ontario are expected to contribute the most to a national market softening.
Photograph by: ALLEN MCINNIS, GAZETTE FILES , The Gazette
Greater Montreal Area resales declined for the third straight month in October, with stronger sales of less expensive suburban homes driving median condo prices down two per cent to $225,000, year over year, the Greater Montreal Real Estate Board said Friday.
“The two-per-cent decrease in October is due in part to a composition effect, as the proportion of transactions on the island of Montreal — where prices are higher — decreased in favour of the suburbs,” said Paul Cardinal, market analysis manager at the Quebec Federation of Real Estate Boards. “The fact remains that some areas on the island of Montreal and on the South Shore registered a decrease in condominium prices, while others in Laval and on the North Shore did not.”
The drop in October, following a seven-per-cent rise in September, illustrates the impact of sales on median prices, which often fail to indicate a real appreciation in property values.
Indeed, on Montreal Island, where condo sales dropped 17 per cent in October — compared with a 10-per-cent drop for the region — changes in median prices varied widely from area to area.
On Montreal Island, the median price of a condo remained unchanged at $270,000, but rose 13 per cent to $311,000 in Rosemont/La Petite Patrie. In Mercier/Hochelaga Maisonneuve, condo sales dropped by 31 per cent in October, year over year, sending the median price of a condo tumbling eight per cent to $210,500.
Tougher rules on insured mortgages introduced over the summer have been blamed for slowing sales in Canada’s large real estate markets — Toronto, Montreal and Vancouver. The new rules, which reduced the mortgage amortization period from 30 to 25 years — and thereby increased monthly payments — especially hit first-time buyers who tend to buy less-expensive condos.
In a note Friday, bearish economist David Madani said he believed the change in the mortgage rules was necessary for the future of the housing sector.
“Although federal regulatory tightening of mortgage insurance rules and other lending principles have upset housing, we believe the new restrictions on home buying are prudent rather than too onerous,” said Madani, of Capital Economics. “We think that the housing market is unhealthy and in need of some corrective medicine.”
In Greater Montreal, many suburban areas are benefiting from rises in price or sales.
Chomedey, Laval, had the greatest change in median price, rising 24 per cent in October, year over year. It’s the third month in which Chomedey property values have risen significantly, with the median price of a condo now $233,000, the board said.
The median price of a Laval condo rose 15 per cent in October, from $188,500 to $217,000.
As a region, however, the Montreal condo market is further shifting in favour of buyers. The Greater Montreal Real Estate Board, which calculates active listings to sales over a 12-month average, says the market is still balanced.
But National Bank economist Marc Pinsonneault, who uses seasonally adjusted numbers, says Montreal’s condo market has favoured buyers for the last three months.
“The condo and single family market now has the least favourable conditions (outside of a recession) in eight years,” Pinsonneault said.
Although the market for single-family homes is still in balanced territory, according to Pinsonneault, sales dropped six per cent in October, year over year, with median prices rising three per cent.