Why Montreal Is Standing Strong Against Canada’s Falling Housing Market
A recent report released by the Bank of Montreal emphasized that a countrywide recession might come from a housing marketing that is sorely underperforming. This falling housing market is one of the weakest parts of Canada’s economy — and there’s definitely a correlation between the two, according to BMO’s senior economist.
Toronto and Vancouver Are Among the Affected Cities
Toronto and Vancouver are among the affected cities and had poorer years in 2018. However, Montreal differs from this trend — the market boomed. Thanks in part to the condos for sale in downtown Montreal, the city is ready to surpass Vancouver as the second-largest housing market in Canada.
Foreign investors buying high-priced, luxury homes affected Vancouver’s and Toronto’s previous success in the housing market. However, new legislation and new provincial policy measures have had a detrimental impact on Vancouver’s and Toronto’s luxury housing markets and the sales they were making. These include regional taxes on property purchases specifically targeting foreign buyers.
Demand for Condos in Downtown Montreal
These policies contribute to a larger demand for properties of similar value in Montreal — especially for condos for sale in downtown Montreal. Investors are purchasing multiple presale condo units in order to get a bulk discount. According to a Royal LePage press release, in 2018, condo sales and detached homes in Montreal had a surge of 28.9 percent and 21.4 percent, respectively. However, the condos for sale downtown is not the sole reason that Montreal is showing a positive boom in the housing market.
Comparing Vancouver and Montreal
After a period of low sales, Vancouver continues to be the second-largest housing market. This is due to its property prices. In 2019, a benchmark home in Vancouver costs $1.02 million. In direct comparison, a benchmark home in Montreal costs around $350,000. Montreal’s cheaper prices have incurred a larger volume of property sales. Additionally, the strict mortgage rules and high-interest rates for the expensive homes has continued to stymy Vancouver’s market. This has increased Montreal’s level to the closest it has been to Vancouver since 2008.
Increased Demand for Rental Properties
The housing market success in Montreal could be from the heightened demand for rental properties. More people want to rent their homes, and this has changed the mentality of many Montreal citizens. They now prefer to be tenants. To help with this increased demand for rentals, investors are pushing the development of rentable units. Montreal’s rental vacancy has dropped from 4 percent in 2015 to 2 percent in 2019. Perhaps this comes from the number of students who choose to rent over buying a home.
There has been an increase of 60 percent in the number of foreign students living in Montreal over the last five years due to the prestige of Montreal’s universities. This increase has definitely changed the way the rental market has blossomed.
The condos for sale in downtown Montreal and the investments in the housing market encourage further growth. If this trend continues, the city could surpass Vancouver as the second-largest housing market in Canada. Many factors have decreased Vancouver’s growth while allowing Montreal’s market to blossom.