Property values have continued to climb in recent months in Montreal, despite the growing appeal of the suburbs. However, a certain slowdown in the real estate market is feared in the metropolis, which could benefit tenants and some buyers.
Real estate agency Royal Lepage released a report on property values in Greater Montreal in the third quarter on Wednesday. It reports a 12.5% increase in property values over one year in Greater Montreal, for a current median price of $ 480,673.
This increase coincides with the resumption of sales on the real estate market this summer, after several months of confinement. Sales increased in particular for two-story homes (+ 58.9%), which saw their average value reach $ 610,956 in the region.
The allure of the suburbs
The value of different types of properties, including single-storey homes, has however jumped more in recent months in the North Shore and South Shore of Montreal than in the metropolis. Real estate brokers interviewed by the agency have also noted a stronger demand and lack of inventory in the suburbs of Montreal than on the island in recent months.
“We are the only region in Quebec where we are not ahead in the increase in transactions [immobilières] compared to last year ”, underlines Metro Royal LePage Vice-President and General Manager Dominic St-Pierre.
A situation that is not foreign to the pandemic, which has stimulated teleworking. In a report released Wednesday, which is based on a survey of large rental property owners across the country, real estate agency CBRE reports a “significant increase” in demand from tenants for housing features that make working from home easier and respect for physical distancing. They are thus more likely to wish to have an office, a balcony and a lift-free access to their home, in particular.
To meet these needs, some tenants in central neighborhoods are ready to change neighborhood, or even region. “People are leaving their condos to go buy a single-family home a little outside the big centers,” notes Metro the first vice-president of CBRE, Benoit Poulin. However, he sees here a temporary phenomenon, which should dissipate after the pandemic.
“It’s not just an urban sprawl, it’s an urban exodus.” -Dominic St-Pierre
Towards a slowdown in the real estate market?
The second wave of the coronavirus, which may continue to limit the arrival of immigrants and foreign students in Montreal, could also come to the end of price growth in its real estate market.
“We expect the market to slow down gradually in the coming months,” says Dominic St-Pierre. This situation could particularly affect condominiums, which are increasingly being offered for sale in Montreal, while demand is declining.
“Of course, there will be downward pressure on the price of condominiums in Montreal,” he adds.
Impacts on rents
A slowdown in demand on the Montreal real estate market could also have the effect of creating “more choices for potential tenants”, who have been facing a continuous tightening in the rental market for several years.
In its report, CBRE finds that only 5% of landlords surveyed across the country have increased their rents since the start of the pandemic. Conversely, 40% of respondents said they have lowered the asking rents for some of their homes since the start of the pandemic, while 55% have made no change.
“We see several owners who have not imposed a rent increase this year. Out of solidarity, but perhaps a little out of strategy also because tenants are becoming rarer, especially in the city center, ”raises Mr. Poulin.
The report also points out that 31% of large homeowners surveyed noted an increase in the vacancy rate of their homes by 1 to 2% this year.
In Montreal, some Montreal property owners are also considering not increasing the rents of their tenants next year.