According to a recent report released, the resale price of houses in the Montreal area rose in May for the third straight month, matching a peak set last summer.
Marc Pinsonneault, principal economist at National Bank says, “The improvement in the market has now been sustained for over a year and a half, this bodes well for the price trends in the coming months.”
He says future year-over-year price increases in the five per cent range wouldn’t come as a surprise.
The Teranet-National Bank House Price Index, which measures the selling price of homes that have already sold more than once, rose 1.07 per cent from April to May in the Montreal census metropolitan area.
It was up 1.67 per cent from the period the year before.
The Teranet-National Bank index, which uses June 2005 as a base, reached 154.38 in May, suggesting that house prices have increased 54.38 per cent from that base, putting it at the same level it was at in June 2016, the highest level it has reached for Montreal.
Paul Cardinal, the manager of Market Analysis at the Quebec Federation of Real Estate Boards says, “We are seeing an acceleration in price growth in the Montreal area.” He says the average price of a single family home increased by six per cent from January to May 2017, compared with a two-per-cent increase in 2016. For condos the price increase rose from one per cent in 2016, to three per cent between January and May of this year.
Those numbers were even higher in Montreal, a seven-per-cent increase in the selling price of single family homes, a four-per-cent increase for condos and a five-per-cent increase for plexes.
While the Teranet-National Bank House Price Index compares the selling price of individual dwellings with their previous selling prices, the QFREB measures average selling prices.
“We’re back in a seller’s market for single family homes,” Cardinal says, with an increase in multiple offers and in the number of homes sold for over asking.
Condo sales are also up 15 per cent compared with last year in the region, he says.
National Bank’s Pinsonneault says those increasing condo sales have cleared excess supply and balanced the market for the first time since 2012.
Both Pinsonneault and Cardinal credit the increasing demand and improvements in Montreal’s economy and labour market outlook.
“In terms of fundamentals, things really improved in 2016 and we are still riding that tide,” Pinsonneault says.
While Cardinal says real estate brokers in the field are seeing an increase in the number of foreign buyers, possibly a result of new taxes on non-residents in the Vancouver and Toronto areas, Pinsonneault warns that evidence remains strictly anecdotal.
While sales and prices are up, listings are down, Cardinal says, suggesting that prices will continue to rise for the near future, though he warns that increasing mortgage rates could change that.
Prices in Montreal continue to lag behind, compared to other Canadian cities.