House prices continue to rise in Quebec

On the eve of a 4^me increase in the key rate this year, it will be increasingly difficult for young people to buy a property in Quebec, where the average price of a house has just risen 20%.

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The latest story comes from the Professional Association of Real Estate Brokers of Quebec (APCIQ). From April to June, the median price of a single-family home increased to $450,000 in Quebec, an increase of 20%.

For comparison, the median price of a single-family home in Quebec at the end of 2019 was $265,000, a difference of $185,000.

Going back to today, the median price of a condo in Quebec is $381,000, an increase of 14% in three months. For the Montreal metro area, it’s $410,000, a 14% increase there too.

“It’s scary, but the party is over. With the new rate hike this morning, it is the coup de grâce for price developments. The market will slow down in the coming months”, explains Charles Brant, director of real estate market analysis at APCIQ.

Although prices continue to rise alarmingly, the number of homes for sale in Quebec is falling (-9%). And the same happens with the number of sales (-14%).

“There are already many less [gens] that they are willing to buy today, and with the rate hike they will be even less, because they will not qualify”, he analyzes.

There is no way back

How long will the market continue its vertiginous ascent?

“A partial correction is coming,” Desjardins chief economist Jimmy Jean believes.

Already, in Ontario, house prices have been falling for four months in a row, he stresses. Which is far from the case in Quebec.

Desjardins predicts instead that property prices here will begin to fall in 2023, but not as much as they rose during the pandemic.

The fall forecast by the Lévis institution is 12% by the end of 2023.

“Sales have already dropped and lower prices will come. But we are not going to see the price of houses go back to what it was before the pandemic, ”says the economist.

something to think about

This means that by the end of 2023, the real estate market will have gained 35% in value compared to before the pandemic. And this, whether we experience a recession or not, and whether interest rates stay high or not.

“The problem of housing affordability will continue to be a major problem in Quebec, because the province has experienced a recovery that is not going to go away,” summarizes APCIQ’s Charles Brant.

And we are only talking about the price here. We also have to talk about interest rates, another barrier to affordable housing.

The Bank of Canada is raising its benchmark rate today and for the fourth time this year, currently at 1.5%. The expected increase is 0.75%, which will bring it to 2.25%. It was 0.25% in January.

For every 0.25% increase, we’re talking about an increase of $25 per month for every $100,000 home loan, a mortgage broker recently explained to us.

If we take the example of a $300,000 loan whose payments were $1,000 per month in January, they will increase to $1,600 with today’s increase.

Something to make many buyers think, especially those who are making their first purchase.