Royal LePage maintains its 2022 forecast for the Greater Montreal Area, expecting property prices to show year-over-year increase of 12.5% in the final quarter of the year
- Royal LePage expects continued price appreciation in the Greater Montreal Area through the remainder of 2022. Price forecasts for the greater regions of Toronto and Vancouver are reduced to reflect softening demand.
- Buyers are expected to adjust their purchase budget in response to rising interest rates, while sellers maintain high resale value expectations.
- Bill 96 on Quebec’s official and common language to push some West Island residents to sell their homes to relocate out-of-province.
- Other regional markets in the province begin to see a shift in buyer behaviour as the summer market kicks off.
MONTREAL, July 13, 2022 – The Royal LePage House Price Survey and Market Survey Forecast released today show that property prices in the Greater Montreal Area continued to increase in the second quarter of 2022, while a slowdown in sales caused by successive interest rate hikes were observed.
According to the Survey, the aggregate[1] price of a property in the area increased 13.9% year-over-year to $585,700 in the second quarter of 2022. During the same period, the median price of a single-family detached house rose 18.1% year-over-year to $660,400, while the median price of a condominium rose 11.7% year-over-year to $452,500. Pricing data, which includes both resale and new construction properties, is provided by Royal LePage’s sister company, RPS Residential Property Solutions, a leading Canadian real estate appraisal firm.
“We are seeing a shift in buyer behaviour in the real estate market, with rising interest rates being the main factor,” confirmed Marc Lefrançois, licensed real estate broker at Royal LePage Tendance in Montreal. “As the Bank of Canada announced interest rate hikes against the backdrop of high inflation, buyers began to seriously reassess their financial capacity, which reduced their enthusiasm and slowed down demand for properties in June. Sellers are not adjusting as quickly and are still keeping their expectations very high regarding the market value of their property. We are entering a new chapter signalling healthier price appreciation in the Greater Montreal Area and in the majority of Quebec markets during the second half of 2022,” said Lefrançois.
Royal LePage anticipates that the aggregate price of a property in the Greater Montreal Area will end the year 12.5% higher in the fourth quarter of 2022 compared to the fourth quarter of 2021. Meanwhile, the country’s other two major urban centres, the Greater Toronto Area and Greater Vancouver, have seen their forecast reduced from 16.5% to 3.0%, and from 15.0% to 5.0%, respectively, as softening demand has resulted in quarterly price depreciation.
In the longer term, Lefrançois does not see a lasting softening in demand. Real estate remains an essential commodity and Canada continues to suffer from a structural housing deficit. Lefrançois believes that the softening market should be temporary, although it is influenced by a wide range of economic factors that are difficult to predict. Full employment and the upward trend in wages should cushion the negative effects on the economy and real estate market, not to mention the savings accumulated by households during the pandemic, which continues to stimulate the economy.
“Multiple offers are now becoming a rare occurrence and properties are selling in a few weeks, rather than a few days, as was the case at the height of the demand surge,” noted Lefrançois. “Softening demand is not a cause for concern and was expected since the strength of the real estate market had become unsustainable. Properties are still selling well but at a slower pace.”
West Island of Montreal
In the West Island of Montreal, there has been an apparent shift in buyer behaviour as of May due to significant interest rate hikes and an increase in inventory. There was increased activity for property categories below the million-dollar mark with buyers rushing to purchase at previously locked in lower interest rates, before their rate guarantee expires.
“With financing rates approaching 5% and set to rise even higher, there are budget implications for buyers,” noted Sean Broady, licensed real estate broker at Royal LePage Elite in Beaconsfield. “Market uncertainty and higher interest rates have put a damper on sales in the over 1-million dollar price range as supply begins to outpace demand.”
According to Broady, Bill 96 is also impacting the current shift of the Montreal real estate market, particularly in the neighbourhoods of the West Island, which are primarily made up of English-speaking residents.
“The adoption of Bill 96 raised alarm bells with many West Islanders who moved here from outside the province for work or don’t have strong French skills, and are currently considering leaving. One example is the video game industry that employs some 11,000 workers, a very important demographic in the Greater Montreal job market,” explains Broady. “I’ve listed two properties for sale in the West Island in recent weeks for owners who are looking to leave the province for this reason.”
Lefrançois believes that further inventory could emerge due to households that have gone into debt by acquiring secondary residences. Some members of this group who have chosen fully variable rate financing, without taking into account the increase in interest rates, could be more vulnerable and end up having to put their property back on the market. Stock market disruptions could also affect the assets of certain households that were considering buying a property and push them out of the market. That said, inventory is trending upwards and will likely offer more options to buyers in the near future, while contributing to balancing supply and demand.
Quebec regional real estate markets
Quebec City
In Quebec City, the aggregate price of a home rose 11.0% year-over-year in the second quarter of 2022 to $340,300. Meanwhile, the median price of a detached single-family home increased 10.4% year-over-year to $351,000, while the median price of a condominium rose 12.6% year-over-year to $261,200.
“The significant increase in the median price of condominiums this quarter reflects a shift in demand due to the lack of supply in the single-family category,” said Michèle Fournier, vice president, Royal LePage Inter-Québec. “Regarding the general state of residential real estate in the city, as interest rates increase, some first-time homebuyers may be priced out of the market. Demand for properties is likely to soften, but not enough to have a significant impact on prices,” she added.
Gatineau
In Gatineau, the aggregate price of a home rose 18.6% year-over-year in the second quarter of 2022 to $438,400. Meanwhile, the median price of a detached single-family home increased 18.1% year-over-year to $525,600, while the median price of a condominium rose 20.7% year-over-year to $344,000.
Like elsewhere in the province, the interest rate hikes have affected activity in the Gatineau real estate market.
“Home buyers in Gatineau are adjusting quickly to the market and await opportunities, whereas some sellers hang on to the hot market they have known for the past two years,” said Karine Séguin, licensed real estate broker, Royal LePage Vallée de l’Outaouais. “On the other hand, while the upward pressure on prices is likely to soften, I am noticing more buyers with the promise to purchase that are not closing, as a result of not meeting financing requirements. Also, more buyers are making offers conditional to selling their current homes, which has been extremely rare over the past two years. This is indicative of a hi, but despite this, prices should remain high,” she concluded.
Sherbrooke
In Sherbrooke, the aggregate price of a home rose 15.9% year-over-year in the second quarter of 2022 to $332,600, while the median price of a single-family home increased 14.6% year-over-year to $353,000.
“The transition we are noticing in the Sherbrooke real estate market will likely fuel opportunities for buyers, as sellers adjust to the market and release inventory,” said Alain Laplante, real estate broker, Royal LePage Évolution. “I’m witnessing new inventory in the waterfront category. The imbalance between supply and demand will likely soften over time, although new listings in the region remain low at the moment.”
Trois-Rivières
In Trois-Rivières, the aggregate price of a home rose 22.2% year-over-year in the second quarter of 2022 to $311,100, while the median price of a single-family detached home increased 23.8% year-over-year to $332,300.
“The decline in sales activity in the region is noticeable, but not worrisome,” said Martin Leblanc, agency owner, Royal LePage Mauricie. “Demand remains strong for properties listed below the $300,000 mark. For the remainder of 2022, prices are expected to appreciate but at a more healthy rate.”
House pricing chart – Q2 2022: rlp.ca/house-prices-Q2-2022
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Royal LePage House Price Survey Data
Greater Montreal Area – Q2 2022
| Detached single-family home | |||
| Region | Median price Q2 2022 |
Q2 2022 – Q1 2021 Change (%) | Q2 2022 – Q2 2021 Change (%) |
| Montreal Centre | $1,114,600 | 4.9% | 6.2% |
| Montreal East | $630,400 | 2.7% | 20.3% |
| Montreal West | $822,400 | 3.4% | 11.4% |
| Laval | $648,600 | 3.7% | 23.5% |
| Montreal North Shore |
$520,800 | 4.2% | 23.3% |
| Montreal South Shore |
$596,100 | 2.7% | 15.5% |
| Greater Montreal | $660,400 | 3.8% | 18.1% |
| Quebec City | $351,000 | 2.8% | 10.4% |
| Gatineau | $525,600 | 3.4% | 18.1% |
| Sherbrooke | $353,000 | 3.0% | 14.6% |
| Trois-Rivières | $332,300 | 4.9% | 23.8% |
| Condominium | |||
| Region | Median price Q2 2022 |
Q2 2022 – Q1 2021 Change (%) | Q2 2022 – Q2 2021 Change (%) |
| Montreal Centre | $535,100 | 0.8% | 6.9% |
| Montreal East | $453,300 | 0.8% | 6.7% |
| Montreal West | $423,900 | 1.3% | 6.0% |
| Laval | $384,600 | 2.1% | 14.0% |
| Montreal North Shore |
$359,900 | 2.6% | 21.5% |
| Montreal South Shore |
$384,700 | 2.9% | 14.8% |
| Greater Montreal | $452,500 | 1.3% | 11.7% |
| Quebec City | $261,200 | 2.2% | 12.6% |
| Gatineau | $344,000 | 3.2% | 20.7% |
| Sherbrooke | – | – | – |
| Trois-Rivières | – | – | – |
| Aggregate | |||
| Region | Median price Q2 2022 |
Q2 2022 – Q1 2021 Change (%) | Q2 2022 – Q2 2021 Change (%) |
| Montreal Centre | $702,700 | 1.5% | 9.3% |
| Montreal East | $563,900 | 1.8% | 11.7% |
| Montreal West | $698,300 | 2.9% | 10.3% |
| Laval | $556,400 | 3.6% | 19.7% |
| Montreal North Shore |
$521,100 | 3.5% | 25.1% |
| Montreal South Shore |
$550,000 | 2.7% | 15.1% |
| Greater Montreal | $585,700 | 2.5% | 13.9% |
| Quebec City | $340,300 | 2.2% | 4.0% |
| Gatineau | $438,400 | 4.2% | 18.6% |
| Sherbrooke | $332,600 | 3.3% | 15.9% |
| Trois-Rivières | $311,100 | 5.4% | 22.2% |
*The data in the above table may not correspond to those previously reported for the same period due to later updates in the market.
About the Royal LePage House Price Survey
The Royal LePage House Price Survey provides information on the most common types of housing in Canada, in 62 of the nation’s largest real estate markets. Housing values in the Royal LePage House Price Survey are based on the Royal LePage Canadian Real Estate Market Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of approximately 19,000 real estate professionals in over 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Bridgemarq Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.
For more information, please contact:
Lara Berguglia
North Strategic on behalf of Royal LePage
lara.berguglia@northstrategic.com
514-994-2382
[1] Aggregate prices are calculated via a weighted average of the median values of all property types surveyed. The data is provided by RPS Residential Property Solutions and includes resale market transactions as well as new construction.
