While it was expected that property prices would continue to decline in the Greater Montreal Area’s real estate market following eight consecutive interest rate hikes, buyers have returned to the market, driving prices up again in early 2023.
According to the latest data from the Royal LePage House Price Survey, the price of a home in the Greater Montreal area decreased 3.5% year-over-year in the first quarter of 2023, but rose 1.3% from the previous quarter to $551,400, indicating that the downward price trend in the region is behind us and the spring market is well underway. Royal LePage now expects the aggregate price of a home in the GMA to increase 3.0% in the fourth quarter of 2023 compared to the same period in 2022, to $560,629, which is an increase of 5 percentage points over the company’s forecast released last December.
“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.”
“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.
Although price increases in the Quebec regions outside of Montreal were moderate this quarter, they indicate that demand remains 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 areas outside of the Greater Montreal Area followed an upward trajectory, suggesting that the downward price trend would have ended this quarter after less than 12 months.
Only the Gatineau region recorded a year-over-year decline in property prices in the first quarter of 2023, with the aggregate price of a home falling 2.4%, compared with the first quarter of 2022 to $410,800. On a quarterly basis, however, the aggregate home price was up 3.4%, compared with the fourth quarter of 2022. The Sherbrooke and Trois-Rivières markets posted aggregate home price gains of 7.8% and 2.5% year-over-year in the first quarter of 2023 to $347,200 and $302,700, respectively, while increasing quarter-over-quarter by 5.3% and 4.4%. During the same period, the aggregate price of a home in Quebec City increased 4.1% year-over-year and 2.0% on a quarterly basis to $340,600.
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