- Royal LePage revises its 2023 house price forecast upward for the Greater Montreal Area’s residential market to reflect a softer and shorter-than-expected correction
- The aggregate price of a home in the region declined in the first quarter of 2023 compared to the same period last year, but increased since the fourth quarter of 2022, indicating the resilience of the market at the beginning of the year
- The maintenance of the Bank of Canada’s key interest rate as a result of declining inflation contributed to the return of buyers to the market in early spring
MONTREAL, April 13, 2023– According to the Royal LePage House Price Survey and Market Survey Forecast, released today, a price correction in the Greater Montreal Area’s residential real estate market has ended its run earlier than expected. As the spring market begins, the Company predicts that property prices will end the year on a slight increase, rather than on the previously anticipated decline.
During the first quarter of 2023, the aggregate[1] price of a home in the Greater Montreal Area declined 3.5% to $551,400 over the same quarter in 2022. During the same period, the median price of a single-family detached home in the Greater Montreal Area decreased 3.1% year-over-year to $616,300. Meanwhile, the median price of a condominium remained relatively flat with a slight increase of 0.8% year-over-year to $450,400. Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian real estate valuation company.
“Until March 8th, the day the Bank of Canada announced that it was maintaining its key interest rate for the first time in 12 months, homebuyers remained on the sidelines of the market while assessing the extent of the impact on their future purchase plans. As we had anticipated, the return of real estate demand quickly manifested itself after the central bank chose to stabilize its key lending rate, implying that the worst was behind us. And, it coincided with the return of good weather and the popular season of house hunting, bringing a wave of optimism to those who had temporarily put their plans on ice,” said Marc Lefrançois, real estate broker, Royal LePage Tendance in Montreal.
Lefrançois adds that for the first time since the pandemic period, the Montreal market has returned to the seasonal cycle of real estate activity. He attributes part of the increase in traffic to the fact that this time of year is a good time to buy a home for families who will be able to move into their new home in time for the start of the school year.
According to a recent Royal LePage survey, conducted by Maru/Blue, nearly a quarter of Canadians (24%) were looking for a new home in the past year, and 63% said they had delayed their plans due to rising interest rates. 62% of respondents who said they had delayed their purchase plans intend to return to the market imminently, following the Bank of Canada’s first stabilization of its key lending rate since March of 2022. According to Lefrançois, however, many first-time buyers will wait for the Bank of Canada’s interest rate to fall before returning to the market.
“We are approaching a balanced market, but any change in the economic situation could tip the scales either way, towards a buyer’s or seller’s market,” explains Lefrançois. “It’s all about the supply of properties in the market and the response of buyers. “With risk factors still on the horizon, the balance remains fragile.”
While the sky appears to be clearing, some segments of the residential real estate market may take longer to see strong buyer demand return. Even as interest rates stabilize, some households that sought to purchase a second home or luxury property remain cautious, reducing opportunities for sellers to obtain their desired selling price. Royal LePage also expects the price of single-family homes in Quebec’s recreational markets to decrease by 8% in 2023, compared to the previous year. According to the latest report, recreational real estate markets will be most affected by the price correction in the province, compared to urban markets, due to the unprecedented demand caused by the pandemic housing boom. The report also predicts that Quebec will see the largest correction in recreational property prices in the country.
Greater Montreal Area forecast revised upwards
In the Greater Montreal Area market, Royal LePage is forecasting the aggregate price of a home will increase 3.0% in the fourth quarter of 2023, compared to the same period in 2022 to $560,629. The company revised its previous forecast upward to reflect stronger-than-expected buyer demand in 2023 and an expectation that inflation will continue to improve. The correction of property prices in the region was short-lived. The condominium segment is expected to perform better than the single-family segment given buyers’ limited purchasing power as mortgage rates remain relatively high.
“Although property prices in the region have declined this quarter compared to the same period last year, they have increased slightly since late 2022, which has led us to revise our estimates upward,” said Dominic St-Pierre, vice-president and general manager of Royal LePage, Quebec Region. “Soaring inflation is behind us and consumer confidence in the housing market has rebounded. We remain cautiously optimistic about property values, as economic indicators, full employment levels and limited supply of homes in the market appear to be in favour of a recovery, rather than a slowdown in demand over the medium term.”
Elsewhere in the Province
Among the other Quebec markets in the report, only the Gatineau region recorded a year-over-year decline in the aggregate price of a home in the first quarter of the year, falling by 2.4% from the first quarter of the previous year to $410,800. On a quarterly basis, however, the price was up 3.4% from the fourth quarter of 2022. The Sherbrooke and Trois-Rivières markets posted aggregate home price growth of 7.8% and 2.5% year-over-year in the first quarter of 2023 to $347,200 and $302,700, respectively, while increasing 5.3% and 4.4% on a quarterly basis. The aggregate price of a home in Quebec City increased 4.1% year-over-year and 2.0% quarter-over-quarter in the first quarter of 2023 to $340,600.
Although prices in Quebec’s regional markets saw moderate growth this past quarter, they indicate that demand is still strong relative to the supply of available properties when compared to the peaks reached in 2022. In addition, when tracking the market from one quarter to the next, all regions outside of the Greater Montreal Area observed upward momentum, suggesting that the downward price trend ended this quarter, after less than 12 months. Based on the results of the first quarter of 2023, Royal LePage believes that competition will remain high this spring in all of the Quebec markets surveyed, putting upward pressure on home prices once again.
Read other Quebec regional releases here.
National house price chart – Q1 2023:
rlp.ca/house-prices-Q1-2023
Updated Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q1-2023
Quebec markets, 1st quarter 2023
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About theRoyal LePage House Price Survey
The Royal LePage House Price Survey provides information on the most common types of housing in Canada, in 62 of the nation’s largest real estate markets. Housing values in the Royal LePage House Price Survey are based on the Royal LePage Canadian Real Estate Market Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of approximately 20,000 real estate professionals in over 670 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, which has been dedicated to supporting women’s shelters and domestic violence prevention programs for 25 years. Royal LePage is a Bridgemarq Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.
For more information, please contact:
Maria Bello Vega
North Strategic on behalf of Royal LePage
maria(dotted)bellovega(at)northstrategic(dotted)com
514.513.6577