Although Montreal and Toronto both have thriving real estate markets, they appeal to different types of investors, and the question of which city is “better” tends to spark heated debates between contenders. The two cities are worlds apart; while they are both culturally diverse, one is a laid-back, Francophone metropolis with a quaint European charm while the other is a fast-paced, Anglophone business-hub.
Still, the two cities continue to compete for the title of The Best City in Canada, and outdo each other on different rankings.
When it comes to buying real estate, here are some distinctions to keep in mind while deciding between Montreal, or Toronto.
Montreal vs Toronto: Average Real Estate Prices
According to the latest (July 2016) Canadian Association of Real Estate statistics, the average home price is $710,000 in Toronto, while only $349,000 in Montreal. Digging deeper into the price curve, Toronto’s cheapest homes (the ones with an hour’s commute into the city center) are priced at an average of $200,000, while homes in the Downtown area go for an average of $777,707. In Montreal, the average home an hour out of town can be purchased for as low as $80,000 while the average price Downtown is $270,772.
Montreal vs Toronto: Property Value Growth Rate
It’s no secret that Toronto has been experiencing near-exponential growth rates in market value over the past few years. The House Price Index recorded a 3.14% monthly increase in Toronto (a 13.25% year-over-year change). Montreal on the other hand continues to be a slow and steady market, showing 0.61% monthly increase and a +3.10% annual trend between June and July of 2016.
While Toronto’s quick growth has had investors eager to stock up their portfolios, the market also comes with legitimate concerns about the future and sustainability of these financial results. The surging prices make the city “extremely vulnerable” to an economic or financial shock, with increasing concerns a potential housing bubble. (Chris Sorensen, Macleans). Efforts to cool the market are already underway with Scotia-bank curtailing their mortgage and talks of implementing a 15% luxury tax for foreign investors, as was tried and tested in BC. All in all, Toronto is appealing to those who can afford the skyrocketing prices, as well as the investment risks that come with them. On the other hand, Montreal presents a safer and more stable investment alternative, with prices on a modest increase year over year.
Montreal vs Toronto: Rental Rates
The average price for a 1 bedroom apartment in Montreal’s city center is $955.92/month, and $1,777.86/month for a family sized apartment (3 bedrooms) outside of the city center.
In Toronto, a 1 bedroom apartment in the city rents for an average of $1,535.38, while a 3 bedroom in the suburbs will cost around $2,665.98 a month.
Montreal vs Toronto: Cost of Living
The average cost of living is 21% higher in Toronto than in Montreal. While some services are priced relatively equally between the two cities (food and entertainment), Montreal is 38% cheaper when it comes to housing costs, and 48% cheaper when it comes to transportation. (Expatistan). Toronto on the other hand has a higher average income; $3,387.33/month compared to $2,722.76 / month in Montreal.
Montreal vs Toronto: Other Considerations
Toronto’s inner city rental market, rendered unaffordable for most families, is fuelled by professionals and students. Since the city has experienced a boom in new condo projects, buildings in the downtown area tend to be newer constructions. While condominium fees tend to be higher, new buildings offer more of a turn-key investment option.
Montreal’s market is more consistent, with rent caps limiting exorbitant price increases, therefore enabling more stability in investment projections. The housing market is equally split between homeowners and tenants, assuring a low vacancy rate for owners of income properties. Within the tenant demographic, there are three major segments. Students, both local and international, prefer to rent in neighbourhoods close to the major universities such as the Guy-Concordia area, the McGill Ghetto, and the Quartier des Spectacles. Professionals lean towards the South West of Montreal (especially Griffintown and St Henri), the Downtown core, or Old Montreal. Families and European professionals tend to prefer the Plateau, Little Italy, Outremont, and Westmount.
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