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Montreal resale market highest since 1993, survey finds

Alison MacGregor, The Gazette

Published: Tuesday, February 26

Despite more bad news yesterday about the U.S. housing market, the Montreal resale real estate market remains buoyant, says a new study.

The survey was conducted by the Greater Montreal Real Estate Board (GMREB) and the Canada Mortgage and Housing Corp. (CMHC).

Last year, figures show that the city’s resale market reached its highest level since 1993, with 43,543 existing properties sold in the Montreal metropolitan area, compared with 38,792 in 2006, an increase of 12 per cent.

The real estate board said that despite the difficulties experienced by the manufacturing sector, employment growth of 2.5 per cent and an unemployment rate of 7 per cent  — the lowest in 20 years — contributed to the high number of sales.

The board also pointed to strong consumer confidence and flexible financing conditions as contributing  factors to increased home sales.

Asked about the forecast for 2008, CMHC market analyst Astrid Joseph said that “we predict it will be very strong.”

She said estimated total sales volume for 2008 is for between 41,000 to 41,500 properties to be sold and that the average selling price of a property would be $263,5000, an increase of five per cent from the previous year’s numbers.

“That is well above the inflation rate,” she said.

The news continues to be positive the following year, she said.

For 2009, Joseph said sales volumes are predicted to hit 40,700 properties sold with the average selling price of a property to hit $274,000, an increase of four per cent over 2008’s expected average selling price.

“A very dynamic market is on the way for the greater Montreal area,” she said.

Asked why the Canadian market is not be suffering from the same slump as the U.S. home market, she said that the two markets are quite different.

“What we are seeing in Canada is that the underwriting norms are more conservative and that Canadian lenders are more conservative,” she explained. “Also, the Canadian attitude toward debt is more conservative than in the U.S.”

She also pointed to strong fundamentals in the Canadian economy, such as the lowest unemployment rate.

“The fundamentals are quite good,” she said. “That’s why we do not see the market dropping.”

amacgregor@thegazette.canwest.com

© The Gazette 2008