Two Phases to the Montréal Area Real Estate Market in 2012

croissanceÎle-des-Sœurs, January 22, 2012 – According to the real estate brokers’ provincial database, there were 40,133 residential sales transactions in the Montréal Metropolitan Area in 2012, a 1 per cent decrease compared to last year, indicated the Québec Federation of Real Estate Boards (QFREB).

After a strong start to the year, real estate activity slowed significantly. The decrease in sales in the third quarter (-8 per cent) and fourth quarter (-15 per cent) of the year completely erased the gains posted in the first (+4 per cent) and second quarter (+10 per cent). “The more restrictive mortgage rules that came into force in July were a turning point and the impact was immediately felt in terms of real estate activity,” said Diane Ménard, Vice-President of the Greater Montréal Real Estate Boards (GMREB) Board of Directors and spokesperson for the Québec Federation of Real Estate Boards (QFREB) for the Montréal area. “The impact was particularly strong on the condominium market, where there are many first-time buyers,” she added.

The 1 per cent increase in single-family home sales in 2012 was not enough to offset the 2 per cent decrease in condominium sales and the 4 per cent drop in plex sales. “We became accustomed to seeing record-setting condominium sales year after year, but in 2012 sales fell for the first time since 1995,” said Paul Cardinal, Manager, Market Analysis, at the QFREB.

By geographic area, the number of transactions in 2012 decreased by 4 per cent on the Island of Montréal and by 2 per cent in Vaudreuil-Soulanges compared to 2011. On the other hand, sales on both the North Shore and South Shore grew by 3 per cent, while sales in Laval remained stable (0 per cent).

Property prices in the Montréal Metropolitan Area increased by 3 per cent for single-family homes, 3 per cent for condominiums and 4 per cent for plexes in 2012. All of these price increases were slightly smaller than those observed in recent years.

The number of properties for sale increased (+10 per cent) for a second consecutive year in the Montréal Metropolitan Area. The largest increase in supply was for condominiums (+19 per cent), to the extent that market conditions for this property category relaxed significantly in recent months. In fact, the condominium market has become balanced across the metropolitan area for the first time since 1999.

Sharp Decrease in Sales in Fourth Quarter

Sales in the Montréal CMA fell by 15 per cent in the fourth quarter of 2012. The 7,501 transactions concluded between October and December represent the lowest fourth quarter sales result since 2008. The decrease in condominium sales reached 20 per cent in the fourth quarter of last year.