Close X
Tuesday, November 19, 2024
ADVT 
National

Amid Hot Real Estate Sector, Montreal Properties Remain A Relative Bargain

The Canadian Press, 08 Dec, 2015 12:18 PM
    MONTREAL — Sergio Bonici is disappointed that his fourplex in Montreal has attracted little interest in four months on the market.
     
    Despite only 10 people coming for a viewing, the 50-year-old has no plans to budge from his asking price of $525,000, noting the property is a revenue generator ideally located near a Metro station and a hospital in the borough of Verdun.
     
    As home sales in Toronto and Vancouver continue to hit record levels, the real estate sector in Canada's second-largest city remains an outlier, with prices almost $100,000 less than the national average.
     
    "I would be more stressed out in those markets," said Bonici. "If there was a downturn, I'd much rather be in this market because the risks are lower."
     
    He said the main challenge is that Montreal buyers don't really understand the revenue property business.
     
    "Being that we have small-time investors here in Quebec, it's harder for them to grasp the numbers. They're looking more at how pretty the property is instead of looking at revenue."
     
    After years of sharp price spikes and housing bubble concerns, Canada's two hottest real estate markets are expected to moderate to levels closer to what most Canadians have experienced.
     
    The Canada Mortgage and Housing Corp. is predicting that national price growth will slow to 1.3 per cent in 2016 and 1.4 per cent in 2017, down from 7.2 per cent this year and 6.7 per cent in 2014, due to softer growth in the two most expensive real estate markets.
     
    Although sales of Montreal's million-dollar homes surged 25 per cent in the first 10 months of 2015, the overall market has seen waning demand from first-time homebuyers looking for cheaper properties.
     
     
    Amy Assaad of Royal Lepage Heritage said Montreal's real market has slowed in the last three years, although prices remain strong for some luxury condo projects.
     
    "They're still selling but they're just not selling as quickly," she said.
     
    Montreal remains one of the country's best big-city bargains when it comes to buying a home.
     
    The average sales price this year is forecast to be $338,500 in the city, compared to $612,000 in Toronto, $887,600 in Vancouver and $433,600 nationally,  according to the CMHC, which relies on figures from the Canadian Real Estate Association and the Quebec Federation of Real Estate Boards.
     
    Political instability is often cited as the reason for lower home prices in Quebec. But while flare-ups in the sovereignty debate or the election of the Parti Quebecois governments have periodically dampened sales, particularly in anglophones districts, other factors may be more dominant, say experts.
     
    Lower levels of immigration, weaker incomes and employment growth, traditional preference for renting and a less dynamic business activity have long constrained consumer demand and depressed prices, says Paul Cardinal, manager of market analysis for the QFREB.
     
    "We're in a relatively balanced market for single detached homes," Cardinal says. "That means there's less pressure on price."
     
    CMHC chief economist Bob Dugan says sales are impacted by population growth, the age of core buyers, economic strength and interest rates.
     
    "The fundamental drivers have been more supportive of house price growth in places like Toronto and Vancouver than Montreal historically," he says.
     
    Mo Chaudhury, finance professor at the Desautels Faculty of Management at McGill University, said weaker economic fundamentals are the main driver behind Montreal's relatively tepid demand.
     
    He said Montreal's business sector isn't as vibrant as Toronto's, with big employers such as Bombardier and companies in the pharmaceutical and forest products industries under pressure.
     
     
    Quebec's language policies that restrict who can attend English-language schools is also a disincentive for companies to set up shop and attract employees willing to relocate, he added.
     
    The province's historical preference for renting is also a factor, although the trend to ownership has been rising with the growth of the condo market.

    MORE National ARTICLES

    Advocate Says B.C.'s Children In Government Care Need More Social Workers Now

    Mary Ellen Turpel-Lafond says the province has fewer social workers now compared to 13 years ago and that the government must hire more by boosting funding for the Children's Ministry.

    Advocate Says B.C.'s Children In Government Care Need More Social Workers Now

    Northern Gateway naysayers missed their chance to oppose pipeline: CAPP

    Northern Gateway naysayers missed their chance to oppose pipeline: CAPP
    Lewis Manning told a Federal Court of Appeal in Vancouver that it's a shame that some organizations chose not to take part in the process.

    Northern Gateway naysayers missed their chance to oppose pipeline: CAPP

    Police Seek Person Of Interest In Death Of Man Shot With Arrow In Kitchener, Ont.

    Police Seek Person Of Interest In Death Of Man Shot With Arrow In Kitchener, Ont.
    Investigators say a man described as six feet tall and 40 to 50 years old is believed to have been in the area where Michael Gibbon was found on Monday morning.

    Police Seek Person Of Interest In Death Of Man Shot With Arrow In Kitchener, Ont.

    Mom Seeks Justice For Teen Daughter Carly Fraser After B.C. Refuses To Review 19-Year-Old's Suicide

    Mom Seeks Justice For Teen Daughter Carly Fraser After B.C. Refuses To Review 19-Year-Old's Suicide
    Carly Fraser died 20 hours and 35 minutes after turning 19.

    Mom Seeks Justice For Teen Daughter Carly Fraser After B.C. Refuses To Review 19-Year-Old's Suicide

    Winnipeg Community Activist Michael Redhead Champagn Recognized As Future Leader By Time Magazine

    Winnipeg Community Activist Michael Redhead Champagn Recognized As Future Leader By Time Magazine
    Michael Redhead Champagne, the 28-year-old founder of Aboriginal Youth Opportunities, is featured in an online video and in Time's international print edition.

    Winnipeg Community Activist Michael Redhead Champagn Recognized As Future Leader By Time Magazine

    CJ Fowler: Video Shows Damien Taylor Exhibiting Normal Behaviour Despite His Testimony

    Five minutes of video from the Greyhound depot in Kamloops, B.C., showed Taylor sitting at the door, doing little but looking in his backpack.

    CJ Fowler: Video Shows Damien Taylor Exhibiting Normal Behaviour Despite His Testimony