Montreal real estate roars back with 'greater pent-up demand than anticipated'
10 Jul 2020
Montreal real estate prices are going up, not down.
Royal LePage says that despite the COVID-19 pandemic, house price growth in greater Montreal accelerated in the second quarter of 2020 compared to the period last year.
Montreal real estate roars back with 'greater pent-up demand than anticipated'
Real estate brokerage activities in Quebec were suspended in March due to the pandemic.
The resumption of business on May 11 “was enough to produce greater pent-up demand than anticipated, including from buyers who had to put their activity on hold, resulting in higher prices in all property categories,” Royal LePage said in a report published Thursday.
The second-quarter numbers led the real estate brokerage to revise its forecast for 2020.
Citing the health crisis, Royal LePage said in April that if business activity began to return to normal by late spring, aggregate home prices in Montreal would decline by 0.5 per cent by the end of 2020.
After real estate transactions resumed in May, prices shot up and pent-up demand led to a record number of sales in the second quarter.
In its latest report, Royal LePage predicts an increase of 3.5 per cent, with the median price of a home in greater Montreal expected to reach $452,000 in the fourth quarter of 2020 compared to the same period in 2019.
The aggregate price of a home in greater Montreal was $449,996 in the second quarter, an increase of 7.7 per cent compared to the same period last year.
Dominic St-Pierre, Royal LePage vice-president and general manager for Quebec, said the temporary suspension of sales has “widened the gap between supply and demand.”
“In my 18-year career, I have never seen such a tight ratio between the number of new listings and sales,” St-Pierre said. “The region has reached a new high in this seller’s market, despite the fact that the Montreal region has been hit the hardest by the pandemic and lockdown in Canada.”
He said real estate brokers are seeing growing demand for intergenerational properties as well as inquiries by people planning to buy with family or friends, which may be a response to too much social distancing.
“Since many people will continue working from home beyond the pandemic, some of the expenses previously allocated to commuting, eating out, recreation and travel will be reallocated to a home office and adapting the home for better work-life balance,” St-Pierre said.
The region could also see a jump in new condominium listings in the third quarter due to the decline in tourism.
“Condominium owners using their properties for short-term rentals, popular with tourists, may decide to list their property or rent long-term,” Royal LePage said.
As for home prices, they will not stabilize until there is a significant increase in homes for sale.
“Any increase in inventory is expected to be very gradual, and a slight softening in prices and demand could begin in late 2020 or early 2021,” St-Pierre said.
