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Quebec real estate: 2020 trends

Real estate prices in Quebec soared in 2019. This upward trend should continue in 2020, but may start losing steam. Hélène Bégin, Desjardins Group’s Senior Economist, analyzes the main real estate trends.

“The number of sales in Quebec could rise 5% in 2020 compared to roughly 10% in 2019. The increase in average prices will reach 3% next year after about 5% this year.”[1]

Real estate prices keep climbing

Skyrocketing Montreal real estate prices grabbed a lot of attention in 2019, but prices outside Montreal also rose significantly. A noteworthy exception was Côte-Nord, where prices dropped slightly.

The average sale price across the province was $323,000 in 2019.

Bidding wars: The new normal?

During the last year, a growing number of properties in Greater Montreal sold above asking. This included 30% of single-family homes in Pointe‑Claire, Kirkland, Beaconsfield, Rosemont–La-Petite‑Patrie and Villeray–Saint-Michel–Parc-Extension.

In 2020, “the chances are high that bidding wars will be even more widespread in Montreal. Although the phenomenon is less obvious in the Gatineau and Quebec City Census Metropolitan Areas (CMAs), it has probably increased there, too,” said Hélène Bégin.

Montreal’s overheated real estate market

Higher demand, lower supply and a shortage of properties have come together to fuel overheated markets in Montreal and Ottawa. From January to October 2019, the cumulative increase in prices reached 5.8% in Montreal and 7.9% in Ottawa.

According to the Canada Mortgage and Housing Corporation (CMHC), the degree of overvaluation remains low in Montreal. Montreal’s market is far from being as problematic as Toronto’s was two years ago.

“As long as the economy, job creation and interest rates remain favourable, activity will be sustained. Apart from stricter regulation, only a massive economic shock could destabilize the Montreal real estate market. For now, the risk of this happening remains fairly low,” said Bégin.

Interest rates still low

The troubled global economy has kept fixed mortgage rates low. No changes are expected in 2020. The same goes for variable mortgage rates and credit margins with interest rates that vary based on the Bank of Canada’s (BoC’s) overnight rate. Key rates in Canada remained stable in 2019 despite the three cuts imposed in the United States.

“In Quebec as in Ontario, as along as the economy remains robust and employment grows, low borrowing costs will continue to stimulate the residential sector. Nonetheless, if economic growth were to slow more than forecast for 2020, the housing market would follow suit,” said Bégin.

Financial assistance for first-time buyers

Since the fall, the Canada Mortgage and Housing Corporation (CMHC) has been offering first-time home buyers financial assistance equivalent to 5% or 10% of the property value. It’s meant to help would-be home buyers increase their down payment, thereby bringing down the size of their mortgage.
Learn more about the First-time Home Buyer Incentive

[1] Activity Remains Strong in Quebec and Regains Strength in Ontario, Desjardins, Economic Studies, Spotlight on Housing, December 3, 2019.