The house price survey report released by Royal LePage in October 2019 did not come as a surprise to many people in the Greater Montreal Area who expected the real estate market activities to register an upward growth. According to the report, the housing market in Montreal registered growth in both sales and prices. The Greater Montreal Area posted a 5.9% year-over-year appreciation in the third quarter of 2019, the highest rate for the residential market since the second quarter of 2018. The report also revealed that GMA would experience the highest housing price increase in 2019. The report was welcomed news for homeowners who are looking to sell their properties and not so good news for buyers who were waiting for the prices to fall.
Home Prices In GMA Predicted To Grow
The appreciation of home prices in the Greater Montreal Area has exceeded 4% for 13 consecutive quarters. Home prices for Montreal Center were $532,026 while that of the Greater Montreal Are was $418,731. The Canada Mortgage and Housing Corporation predict that home prices in GMA will rise to $471,000 by 2021, an increase of 22% from the average price in 2018 which was $385,000. About 9,440 homes were sold in the third quarter of 2019 compared to about 844 in the same period in 2018.
Nationally, Royal LePage reported a 14% increase in the aggregated home prices in the third quarter. Home prices in Canada rose to $630,335 in the same period and were about 50% higher than the aggregate home price in the Greater Montreal Area. Home price appreciation in the GMA varied with the housing type and location. The median price of a two-story home had the highest appreciation, rising 6.5% to about $529,700 while that of a bungalow rose 5.6% to $529,800. The median prices of condos increased by 4.7% to $335,800.
Home price appreciation rate was highest in Montreal East than the country’s largest urban centers, rising 8.5% in the third quarter to reach $439,500. The medium price of a two-story home increased 11.3 from the same period in 2018.
The recent trends in the Montreal housing market reveal the need for new construction to meet the growing demand. Demand for homes in the area has been accelerating for years with the trend expected to continue into the future. There were more construction activities in 2019 than in 2018, represented by about 20.5% increase in new construction in GMA.
Why Are Home Prices Rising?
Housing prices in Montreal are climbing for two simple reasons; increasing demand and shrinking supply. Montreal is an attractive city with a lot to offer its residents. Immigration into the city is one of the highest, with people looking for property to buy or rent. As a result, the demand for housing far outweighs supply, leading to soaring home prices. The demand is also linked to the recent boom in new jobs. According to CMHC, the price growth is likely to remain strong for the next two years before eventually slowing down.
The real estate market in Montreal registered an upward growth in the third quarter of 2019. Home prices in the Greater Montreal Area have registered price appreciation for 13 consecutive quarters, including a 5.9% year-over-year appreciation in the third quarter of 2019. The upward prices and sales are driven by strong demand and shrinking supply.