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Montreal Real Estate Price Growth Expected To Surpass All Major Canadian Cities in 2019

Montreal's appreciation rates will outperform Vancouver's and Toronto's next year. Nationally, home prices are on the downturn.

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According to a market survey by real estate company Royal LePage, Canadian home prices are expected to appreciate at a low rate in 2019. The average single family home is forecast to rise by 1.2% to a price of $638,257. In the Greater Toronto Area, prices should make modest gains of around 1.3% to $854,552. In Greater Vancouver, the average home appreciation rate is forecast at 0.6% to $1,291,144. Meanwhile, median prices in the Greater Montreal Area are expected to see the largest gains, rising by 3% cent to $421,306.


TL;DR: Economic, regulatory, and political headwinds are expected to cool home price growth across Canada. Montreal will outperform the nation when it comes to price growth next year, with the average home appreciating by 3%. 


In the report, CEO of Royal LePage wrote: “Markets aren’t perfect. They overshoot and then they must correct.. The Canadian housing market in 2019 will remain in the correctional cycle that began in 2018, where price gains and sales activity are below the long term norm, after a few years of uncomfortably high major market price increases. This is a Canada-wide statement, and of course our huge nation is a market of markets. To provide insight that is useful for consumers and business planners alike, our forecasting is both nationwide and region by region.”

The Canadian market is supported by strong economic fundamentals, including a robust rate of new household formation and excellent employment growth. Meanwhile, housing availability is scarce, especially in the rental accommodation market. Policy makers in Canada’s major markets will once again be struggling with housing shortages, which will contribute to affordability issues.

The 2019 market owes its low price growth rates to a host of uncertainties including rising interest rates, global trade risks, the persistently low price of Canadian export oil, and regulatory real estate intervention in British Columbia.

On December 5, the Bank of Canada announced that it would not – for the time being – increase its benchmark interest rate of 1.75%. This bodes well for current home buyers aspiring to maximize what they can afford.

Soper wrote: “Demographic shifts and immigration will put increasing pressure on limited housing supply in the coming years. Our research into the buying intentions of the huge peak millennial group, Canada’s 25-31 year-old first-time homebuyers, shows that most plan to own their homes. Financially capable immigrants from around the world, including the United States, are drawn to our high-functioning country in greater numbers each year. And the baby-boomer tipping point has finally been reached. According to Royal LePage research, many in this large cohort of homeowners say that they are ready to trade oversized family homes for dwellings more suited to their new circumstances.”

The Bank of Canada has forecast a 2.1% increase in GDP in 2019, a modest increase compared to 2018 when Canada’s unemployment rate fell to 5.6% in November. This is the lowest on record since 1976.

Real Estate Market Performance in Montreal

In the Greater Montreal Area, the median price of a home is forecast to increase 3.0% at the end of 2019. The median home is expected to reach an aggregate price of $421,306. Montreal has one of Canada’s best performing economies, a historically low unemployment rate and renewed confidence in trade south of the border with the new Canada-United States-Mexico Agreement (USMCA). Because of all of these factors, the Greater Montreal Area real estate market is projected to outperform Canada’s major cities for projected real estate growth.

Quebec’s consumer confidence index fell in November below the last five-year proportion for the first time since January 2017, due to higher purchase prices.

That being said, home price increase will accelerate at a slower pace than it did in 2018. This trend could be further amplified if immigration levels are reduced or if there is government intervention. 

“While previous interest rate hikes by the Bank of Canada and the tightened 2018 OSFI mortgage rules spared the province’s real estate market in 2018, we may see some effects in 2019 as more homeowners renew their mortgage loans. On the upside, this should help stabilize inventory. We anticipate a 2.0 per cent increase in sales in the Greater Montreal Area.”


This article, Montreal Real Estate Price Growth Expected To Surpass All Major Canadian Cities in 2019, appeared first on Shupilov News.

 

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