Montreal might not be doing bad relative to other major Canadian cities, but contrary to numerous praises by media outlets and industry professionals alike, the city is nowhere near the front-runners in becoming the next red-hot housing market.
This according to Better Dwelling’s latest analysis, which argued that the numbers from the CREA and the GMREB showed that Montreal’s real estate sector is showing signs of “narrative crafting”.
“This is when the industry uses observations that can't be proven to drive FOMO from buyers. Buy now, or a mysterious person from the East will lock you out of homeownership in your own city!”
“Once this fear hits, domestic speculators will start driving prices – attracting global speculators. This is when it turns from a healthy market, to a speculative one. They’ll play against each other, until growth tapers. They leave as quickly as they come, and locals are usually left with nothing more than a pile of debt,” Better Dwelling explained.
Framing price growth in terms of dollar value without further context might appear remarkable, Better Dwelling added, but the percentages represented by these figures reveal a far different story.
“The benchmark price, which is the price of a typical home, rose to $326,400. That’s up a whopping 0.06 per cent from the month before, which works out to $200. Compared to same month the year before, this price is 4.64 per cent ($14,500) higher. To contrast, the annual benchmark price increase for all Canadian urban centres was 11.24 per cent,” the analysis stated. “Montreal had a good climb, but it’s underperforming the national composite.”
“The average sale price showed even more conservative gains. The average home in Greater Montreal sold for $374,333, a 4.1 per cent increase from the same month last year. Once again, it’s a healthy market — but only a notch above inflation.”
And even the much-touted growth in activity in the luxury property segment proved to be less than impressive.
“August saw 64 sales above a million dollars, compared to 59 the same month last year. This is 8 per cent growth, a touch under the 8.1 per cent growth of all sales in the region. Sales over $1 million accounted for 2.2 per cent of all Montreal sales. This isn’t a huge portion of sales, nor is it huge growth — regardless of how agents manipulate that statistic.”
“To contrast, let’s look at Toronto luxury sales – which are generally over $2 million. The number of sales in August above $2 million were 132, roughly 4.8 per cent of the market. If we tallied up the number of sales over a million in Toronto, that number would shoot up to 15 per cent.”
Better Dwelling’s full analysis can be found here.
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