The real estate market in 2019

January 11, 2019

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With the expected increase in the Bank of Canada’s key interest rate and foreign buyers’ growing interest in Montreal, the Quebec real estate market is in for an eventful year in 2019. What will characterize the year ahead? Here is a brief analysis of the situation and a few predictions.

Mortgage rate hike

In response to the strong economy, the Bank of Canada plans to raise its key interest rate this year. Higher interest rates will mean higher costs for some consumers, particularly those with variable rate mortgages. “There will be more shopping around,” predicts Sylvain Dyja, Mortgage Development Manager, National Bank. “And new buyers may have to rethink what they can afford,” he says. Regardless “it won’t stop people from buying,” he says.

According to a survey conducted by Léger in October 2018, one in four households plans to buy a property in the next five years.*

* Web survey of 6,931 respondents, including 3,935 in the Montreal area.

Profile of future buyers

According to Fédération des Chambres Immobilières du Québec, future buyers in Montreal can be broken down into three main categories:

37% are millennials: Highly educated people age 18 to 34 who are looking to invest for the long term, generally in a condo.

42% are Gen Xers: People age 35 to 54, most of whom are already homeowners and want a bigger place for their families.

21% are baby boomers: People age 55 and over who are experienced buyers and want to downsize into something requiring less maintenance (e.g., a condo).

Forecasts

According to Fédération des Chambres Immobilières du Québec, real estate sales should continue to grow, but at a slower pace: the forecast is for a 1% increase in sales provincially and 2% in the Montreal area. The median prices of single-family homes and condominiums could rise by 3% to 4%.

Real estate sales in the Montreal area will outpace the rest of Quebec, due in particular to high net migration and the ever-increasing number of foreign investors. This growth will be further spurred by low unemployment, a rise in disposable income, and strong consumer confidence. Experts agree that growth could gradually slow due to higher borrowing rates.

In summary, 2019 could be a very good year regarding real estate market.

 

Sources:

– “Perspectives 2019 du marché de la revente” by Fédération des chambres immobilières du Québec

– Excerpts from an interview conducted on December 18, 2018, with Sylvain Dyja, Mortgage Development Manager, National Bank



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