Sales of existing homes have reached record levels last month, realtors in Montreal said last week, Tuesday. They express their concerns that foreign buyers may be targeting Montreal as an alternative to jurisdictions like greater Vancouver and southern Ontario where they face special taxes.
The Greater Montreal Real Estate Board there was a 15 per cent increase from the previous year as there were 5057 residential sales in May, topping a peak hit in 2007. The average price of a single family home jumped 6 per cent a year ago to $319000.
The main municipal opposition party’s leader, Valerie Plante plans to fight the next municipal election on getting power from the province to impose a tax for she is worried there will be a rush of outside buyers into the city’s marketplace.
Doug Porter, the chief economist with Bank of Montreal says non-resident buyers have been a growing factor in Montreal for some time. “it hasn’t been obvious since the inflows are not as significant as in Vancouver or Toronto, and the underlying market simply isn’t nearly as tight as in those other cities, so prices have remained well contained. In fact, Montreal appears highly affordable globally, and that by itself may slowly generate more foreign buyer interest. While it’s early to say, certainly there is a good possibility that some flows may now gravitate to Montreal from the GTA”, he added.
The Quebec finance minister, Carlos Leitao said his department is monitoring if the tax from neighboring Ontario will have a flash flood effect on the Montreal market. He told the Canadian press this month that they just want to be prepared if it needs to be done then they can do it quickly, but he doesn’t have any plans to do anything in the short-term.
In southern Ontario, the set of 15 measures taken along with the tax may already be having an impact as the Toronto Real Estate Board reported on Monday that May sales were off 20.3 per cent from a year ago in the Greater Toronto Area while average prices dipped 6.2 per cent from April.
The QFREB economic analysis published last month noted that the Canada Mortgage and Housing Corp. proportion of foreign buyers in Montreal was estimated at only 1.5 per cent.