No clear link between Quebec politics, real estate: report
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At the beginning of the provincial election, when a Parti Québécois majority government seemed inevitable, certain readers insisted there was a “PQ effect” in the market, dampening real estate sales.
Fast-forward to late March. With the Liberals running high in the polls, the head of Profusion Immobilier is now talking about a new “optimism in the market” that’s bolstering deals.
“The polls came out and the market woke up,” Louise Rémillard tells me, describing an increase in the number of high-end property sales her brokers have recently closed.
Consumer confidence undeniably affects real estate sales, but I find it hard to believe that an election campaign – and all the polls that come with it - are enough to make or break deals on a larger scale, across the broader Greater Montreal housing market.
Last week, Sotheby’s International Realty Canada said in a report that political uncertainty would make Quebec’s April 7 election “the defining influence” on Montreal’s real estate market until 2015. That’s because of the broad perception that a PQ majority government would hold a referendum on Quebec independence, generating further uncertainty.
Jérôme Lacasse – a master’s student who crunches numbers for housing data collection firm JLR Immobilier - can’t say conclusively that Montreal real estate and politics mix.
After reading about the Sotheby report in The Gazette, Lacasse decided to do his own analysis. He looked at Quebec housing sales before and after provincial elections – along with the 1995 referendum on sovereignty – between 1987 and 2013.
Most of the time Lacasse didn’t see a noticeable difference in sales preceding an election. Not that it’s always easy to separate political uncertainty from broader economic factors such as unemployment and interest rates.
“It isn’t clear that there really exists a link between political uncertainty caused by elections and the real estate market,” he wrote. “Nevertheless, the data collected from times of great political upheaval give the impression that the real estate market is sensitive to this kind of uncertainty.”
The most obvious example of this, he said, was in the months leading up to the election of a PQ majority in Sept. 1994. During the campaign, then PQ leader Jacques Parizeau made it clear that a majority government would hold a referendum during its mandate, once again creating uncertainty.
Of course in the mid-1990s, the housing market was also reeling from an economic recession. Real estate sales and prices were down in Toronto as well as in Montreal.
But as you can see by Lacasse’s chart, housing sales declined more than 20 per cent, on an annual basis, in the months before the vote compared to less than 10 per cent for the province as a whole. That suggests political uncertainty weakened consumer confidence in an area with a higher concentration of anglophones and allophones.
Lacasse says in his report that it’s too early to draw a link between politics and Montreal real estate sales during this election.
In the meantime, I think we need to stop thinking about a simple PQ or Liberal effect on the market.
Like so much of the rhetoric in this election, it’s all about sovereignty.