Stronger economic fundamentals in Canada’s second-biggest city are fuelling accelerated real estate sales and shrinking inventories, all the while luring in foreign buyers.
More stringent lending rules have curbed transactions and slowed price growth in Toronto but have had little effect on Montreal, where buyers are flocking to new condos and sellers are gaining the upper hand.
The trend continued in April as home sales rose 10% from a year earlier. Devimco Immobilier Inc., a developer that sold a record 1,180 condos downtown last year, is moving up two towers because of high demand, with calls coming in from as far away as China, special adviser Marco Fontaine told Bloomberg in a phone interview.
“There’s an incredible buzz,” Fontaine said. “We’re much cheaper than Toronto and Vancouver and that’s attracting a lot of interest.”
According to think tank Institut du Quebec, Montreal added more jobs in 2016-17 than in the previous eight years, with companies including Amazon.com Inc. and International Business Machines Corp. opening new data and tech centers. The city, where both French and English can be heard on the street, is also growing into an artificial intelligence hub that’s home to Thales SA and Facebook Inc. research labs.
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Analysts aren’t seeing signs of overheating yet. Houses in the city, which is known for a vibrant food and cultural scene and universities such as McGill and Universite de Montreal, are still a bargain compared with the country’s most expensive markets. At $317,000, the median detached house price for the greater Montreal region compares favourably against the $870,000 in Toronto and the $1.4 million in Vancouver.
However, the number of properties that sold for more than $1 million grew 20% last year according to Sotheby’s International Realty, which is expecting Montreal to lead major cities in the luxury market segment this spring.
Growth for both benchmark prices and the number of transactions in the resale market has outpaced Toronto’s this year. And pressure on prices – which rose 7% for houses and 3% for condos last year – is set to creep up, the Canada Mortgage & Housing Corp. said in a recent report.
“Demand is strong and the number of properties for resale is down, so market conditions are getting tighter,” CMHC analyst Francis Cortellino stated. “The Montreal market is very dynamic at the moment.”