Independent data research company JLR has published their latest market report and trend outlook for 2019.
TL;DR: Quebec’s economy and employment rate is expected to do well in 2019, driving up demand for housing. However, JLR predicts that sales activity and price growth will not be as strong this year as it was in 2018.
Here are some economic trends forecasted to impact the provincial real estate market this year:
Employment and Economy
Unemployment rate came in at 5.5% at the end of 2018, according to Statistics Canada data.
JLR sees Quebec’s labor shortage persisting through 2019. The weak unemployment rate and growing aging population is likely to continue putting upward pressure on wages housing demand.
The labor market and the economy is doing well, in general, which should benefit both the residential and commercial real estate market markets.
Mortgage interest rates
In January 2018, the final version of the B-20 stress tests entered into force, which has tightened
policy surrounding the qualification process of mortgage borrowers.
Since January, all new mortgages except those contracted from private lenders have been subject to a stress test protecting borrowers from rate increases.
In the past year and a half, the Bank of Canada (BoC) has increased the overnight lending rate by 0.25% points.
These measures have directly impacted consumer purchasing power, and have limited access to homeownership.
Rising rates have also affected current homeowners who hold a variable rate mortgage, and those with upcoming mortgage renewals.
In Montreal, the effects of these interventions does not seem have limited real estate sales activity or price growth.
Quebec real estate market performance in Montreal – 2019
Quebec’s healthy job market has helped stimulate demand for residential dwellings in 2018. Given the spike in performance in 2018, it will be expected that the housing market will slow down slightly in 2019 as households absorb the impact of rising interest rates.
According to recent Desjardins forecasts, the number of transactions is expected to decline in the next year in Quebec, and price increases are also likely to slow down.
New buyers will see the burden of their mortgage payments increased with rising rates, thereby reducing their access to homeownership.
From July 2017 to June 2018, net migration, including the variation in the number of non-permanent residents, was + 76,200 in Quebec, according to data from the Quebec Institute of Statistics (ISQ).
Immigration is a strong stimulator of demand for rental housing. This phenomenon is particularly strong in the Montreal metropolitan area, which receives a large majority of new arrivals.In the short term, some migrants purchase real estate immediately on arrival, which can partially explain the sharp rise in property prices in the Greater Montreal Area compared to other parts of Quebec. In the longer term, these new households are likely to become homeowners and therefore to drive up home sales in the regions where they settle.
This article, Real Estate Forecast: JLR Economic Predictions For 2019, appeared first on Shupilov News.