2023 closed the door on many homebuyers as their purchasing power was hampered by successive interest rate hikes made by the Bank of Canada throughout the year. However, a glimmer of hope has appeared, with more and more economists expecting a change of direction from the BoC in mid-2024, which could give Quebec mortgage holders some relief and allow buyers who had been priced out of the market to return.
“The last quarter of the year saw a slight decline in prices and sales on the real estate market as a direct result of inflation and the significant increase in mortgage rates in 2023,” said Dominic St-Pierre, vice president and general manager, Royal LePage, Quebec Region. “Despite this, we are seeing an increase in requests for showings, which reflects renewed optimism among buyers about the real estate market, while a drop in interest rates seems increasingly within their reach for 2024.”
According to the Royal LePage House Price Survey and Market Forecast, the aggregate1 price of a home in the Greater Montreal Area increased 4.1%year over year to $566,800 in the fourth quarter of 2023. On a quarterly basis, however, the aggregate price of a home in the GMA decreased modestly by 1.5%.
Broken out by housing type, the median price of a single-family detached home increased 4.7%year over year to $629,700 in the fourth quarter of 2023, while the median price of a condominium increased 1.1% to $450,200 during the same period.
Across Quebec, the vast majority of markets in the report ended 2023 with increases compared to year-end 2022, in all property segments, while most regions saw slight quarterly declines, reflecting the effects of higher borrowing costs on households. With the exception of Sherbrooke, the regional markets outside the Greater Montreal Area all recorded slight increases quarter over quarter in the aggregate price, where the impact of higher interest rates has been more muted given the relative affordability of homes in these areas. The Quebec City and Trois-Rivières markets are the only ones to have experienced no quarterly decline in property prices throughout 2023.
A look at the state of the Greater Montreal Area property market shows that the number of active listings for all property types remains well below the ten-year average, and this is despite strong growth in demand due to rapid population growth. In December 2014, there were a total of 30,171 active residential listings in the Montreal Metropolitan Area, compared with 15,907 in December 2023, or 47.3% below the average for the last decade.2
“Even though consumers have adapted to the new reality of higher mortgage rates, increased borrowing costs are the main factor currently keeping prices from escalating, given that the supply of housing remains extremely low. We expect pent-up demand to show up quickly in the housing market, as soon as the central bank announces a change of course in its monetary policy,” said St-Pierre. “The spring market should be dynamic.”
1 Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions and includes both resale and new build.
2 Centris, Active listings for the month of December, from 2014 to 2023, Montreal Metropolitan Area.