real estate | Real estate overheating will continue, says Royal LePage

Real estate prices are higher than expected despite rising interest rates. Royal LePage is revising its 2022 forecast upwards, raising it by 8% to 12.5% ​​for Greater Montreal.

Posted at 6:30am

Isabelle Dube

Isabelle Dube
The press

Unexpected jump

After some surprise in the first quarter of 2022, when robust growth in house prices for all types of residential property was observed, Royal LePage had to revise its full-year forecast. For example, the projected increase for the greater Montreal area reaches 12.5%, while nationally it climbs to 15%.

“We had planned that it should slowly start to stabilize. We didn’t think prices would go up,” Dominic Saint-Pierre, Royal LePage’s vice president and general manager for Quebec, said over the phone.

L’house price study Royal LePage provides quarterly information on residential real estate across Canada and in the country’s 62 largest real estate markets. The data includes both resale market properties and new construction.

Soon $600,000

By the end of 2022, the median price of all properties combined should increase from $571,400 to $599,200 for the greater Montreal area.

Currently, the median price for a single family home is $499,800 on the North Shore, $580,400 on the South Shore and $613,800 in Montreal East. Expect to pay $341,400 on the Quebec side, while in Sherbrooke the price is slightly higher at $342,700.

“There are so few properties on the market, which is why they remain extremely expensive. »

18.5%

If we compare prices for the first quarter of 2021 to those of 2022, we see that the excitement for real estate on the outskirts of downtown Montreal is undiminished.

While the median price of a single-family home in the South Shore, North Crown, and Laval has increased year-on-year by 23.6%, 23.5%, and 23.3%, respectively, the price of a single-family home in the city is Center fell 3.5% on a quarterly basis. A first since the pandemic began. However, the annual increase was 14.3%.


Deficit of 40,000 properties for sale

Single-family home transactions in the greater Montreal area declined 18.9% in the first quarter of 2022 compared to the first quarter of 2021. During the same period, condo sales fell 14.7%.

“The market is slowing down because of a lack of properties for sale,” says Dominic Saint-Pierre. In Quebec there should be between 85,000 and 100,000 properties for sale, like in a market 3 or 4 years ago. We are currently at less than 40,000.

“Demand is not unreasonably high,” he continues. What is unreasonably low is the supply. »

The vicious circle

A vicious circle has set in motion in recent months, explains Dominic Saint-Pierre, because many sellers are also buyers. While Quebecers looking to change homes have traditionally put their property up for sale before or as they begin their own search, they are now afraid of finding themselves in the water. Consumers therefore wait to have found the rare pearl before they think of selling their property.

“These are all properties that should be on the market but aren’t because people are hesitant. It amplifies the lack of inventory and will take some time to fix. »

The expert reminds that the number of houses for sale has become low, especially because many Quebecers have faced changing housing needs at the same time during the pandemic. Overnight the property became a place of work, school and leisure.

Recommended flexibility for sellers

To overcome this vicious circle problem, Mr. Saint-Pierre recommends that sellers set a longer period of possession when selling their property. That way they have enough time to find the property that suits them, he says after they sign the purchase agreement for their current property. According to him, a motivated buyer can find a home in six months.

“What’s interesting about this option is that consumers know exactly what their budget will be for their next purchase because their property is being sold. »

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