The province continues to navigate the rising-rate environment that's taken hold in recent times
Home sales in two of Quebec’s most prominent housing markets posted big yearly declines in January – although activity remains strong, according to a leading mortgage broker based in the province.
The Montreal Census Metropolitan Area (CMA) tally of 1,791 residential sales last month was 36% lower than figures for January 2022, while Quebec City saw sales fall by 24% on a year-over-year basis (from 688 to 521 properties changing hands), according to a release from the Quebec Professional Association of Real Estate Brokers (QPAREB).
Still, that hasn’t resulted in a slower pace for many mortgage professionals in Quebec, according to Ryan La Haye (pictured top), mortgage broker at Planiprêt - Groupe RLH. In fact, he identified a different issue to the sales slowdown as the biggest challenge facing his team.
“The market is still very busy. My team has not experienced any slowdown whatsoever – in fact, perhaps even a potential increase in requests,” he said. “We are seeing that many clients are getting bad or incorrect advice from brokers or bankers as… the complexity of the financing requests has increased.
“This is a combination of norms and qualification being more strict on the lender side and a real resistance to lowering expectations on the borrower side. Our job is to mitigate these two aspects and find an equilibrium where funding is achievable and projects are deliverable.”
Where in Quebec has the housing market cooldown been most evident?
In Montreal, January sales were at their lowest level last month since 2009, yet another reflection of the housing market cooldown that’s gripped many parts of the country since the Bank of Canada embarked on its rate-hiking cycle in March last year.
That’s having an impact on housing supply, with QPAREB’s market analysis director Charles Brant indicating inventory was coming onto the market more promptly as a result.
“With activity approaching a historic low for the month of January, the inventory of properties for sale tends to be replenished more quickly in the Montreal CMA. This dynamic is building on the trend of the last six months,” he said in remarks accompanying the association’s press release on January figures.
“With the impact of rising interest rates on the financial capacity of first-time homebuyers, many are taking a cautious wait-and-see attitude despite the drop in prices. Nevertheless, the latent demand to buy a property is still very present.”
In Quebec City, the falloff hasn’t been as pronounced, according to Brant. Despite the big yearly drop in home sales in the city’s CMA, its housing market is seeing activity roughly match the levels of 2018 with interest rate hikes not appearing to have significantly damaged homebuying prospects.
🏠📉 A Soft Landing for the Quebec City Real Estate Market. See detailed statistics here 👉🏻https://t.co/gaeoHSNoZ5 #RealEstate #QuebecCity #FSMI #RealEstateMarket pic.twitter.com/xhPyNKGEOh
— Ass. prof. des courtiers immobiliers du QC (@APCIQ_QPAREB) February 7, 2023
The market there, Brant said, “has so far demonstrated that property prices are consistent with the purchasing power of households and, more specifically, that of first-time homebuyers.”
He pointed out that the city was one of the most affordable cities for new buyers in the province with half of condominiums changing hands for less than $235,000 and condo units selling for $100,000 under the median price in the province.
“Even if there is some downturn for plexes and single-family homes, prices should stabilize,” he added. “In reality, prices could be stimulated by a market with stronger foundations and the guarantee of more stability despite an uncertain economic context.”
How did the Quebec market fare in 2022 – and what’s in store this year?
Price growth of 13% across Quebec last year was accompanied by an overall drop in sales of 20%, a dip described by QPAREB as “historic” following the housing market boom that took hold at the height of the COVID-19 pandemic in 2020 and 2021.
That said, the median price of a single-family home in the province remained resolute, with the association estimating in December that it would sit around $413,000 by the end of 2022 (an average increase of 13% over the previous year).
QPAREB’s forecast for 2023 is that sales will continue to drop and a more balanced market will prevail – but that it will remain weighted in favour of sellers.
Are you a mortgage professional based in Quebec? What are your thoughts on the outlook for the province’s housing market in 2023? Let us know in the comments section below.
