Residential real estate sales in the Greater Montreal area jumped in September, pushing them to an eight-year high, just as data from CMHC shows foreign buyer activity in Montreal is on the rise.
The Greater Montreal Real Estate Board (GMREB) recorded 2,893 residential sales last month, an increase of 6% over September 2016. Sales growth was led by a 17% year-over-year jump in Laval, while the Island of Montreal saw a 5% increase. Sales in Vaudreuil-Soulanges and the South Shore increased 10% and 7% respectively. Only the North Shore registered a drop in sales compared to 2016, falling 1%.
Prices are also increasing. The median price of single-family homes was up 5% year-over-year in September, to $318,000 while condo prices grew 1% to $253,000. Despite being the next largest metropolitan area by population to the Greater Toronto Area, the two cities’ housing markets are nearly polar opposites. Toronto recorded more than 16,000 sales in September, while the average price of a single-detached home sat at just above $1 million.
Condo sales continue to drive activity in Montreal, especially in Laval, where sales were up 49%. Across the CMA, condo sales increased by 11%, but the real winner in September were multi-plex sales, which were up 23%. Sales of single-family homes were down 1%.
Foreign sales were up 40% from last year, according to the CMHC, marking a huge spike in activity in the category. However, despite the high-percentage increase, foreign sales still only make up about 2% of transactions in the market.
Earlier this year, GMREB called for closer monitoring of foreign buyer activity in Montreal following proposals for a tax on foreign buyers to follow in Vancouver and Toronto’s footsteps. Foreign buyers became a popular scapegoat for Vancouver’s housing affordability problems in the last several years. Stories of desirable homes being bought by wealthy foreigners only to sit empty as prices rose became common.
Those concerns prompted the introduction of a 15% tax for non-resident home buyers. The tax caused a massive drop in the city’s housing activity, giving price growth a chance to slow down. A year later, Ontario included a similar tax along with other housing policy changes in Toronto and achieved a similar drop in both activity and prices.
Despite the effects the taxes had on their markets, experts have yet to find any evidence foreign real estate activity has negatively impacted a Canadian housing market. Montreal is one of the healthiest markets in the country, with a balance of supply and demand and stable prices.
Active listings for the month was down 12%, the 24th consecutive drop in as many months. While Montreal’s housing supply is not a concern yet, that downward trend could be a problem some day if sales begin to outpace new listings.
With foreign ownership in Montreal remaining so low, the CMHC isn’t calling for a for a foreign buyer tax yet. In fact, the chances of them doing so is very low considering the affordability of real estate in the city along with its relatively low amount of activity. Introducing a tax could do more damage than intended to its market as it would likely put a pause on the market’s already limited number of sales.