Montreal home sales seen falling for fourth straight year in 2024: broker group

Median prices for single-family homes and condominiums in Greater Montreal should advance slightly in 2024, an industry forecast says.

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Home sales in Greater Montreal are set to post a fourth consecutive annual decline in 2024 as elevated interest rates weigh on prospective buyers, a new industry forecast says.

Residential property transactions in the Montreal census metropolitan area are poised to fall three per cent next year following 2023’s estimated 15 per cent decline, according to a forecast released Thursday by the Quebec Professional Association of Real Estate Brokers (QPAREB). Median prices for single-family homes and condominiums should advance slightly in 2024, erasing this year’s modest declines, QPAREB adds.

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Multiple interest-rate increases by the Bank of Canada during the past 21 months have taken a bite out of real-estate activity in Montreal and elsewhere. Still, the worst may be over — with many economists now predicting that the central bank will keep its benchmark interest rate at five per cent in the first half of 2024 before starting to make cuts in the second half.

“It will probably be a year of two halves, with some weakness at the start of 2024 due to the economic uncertainty and interest rates remaining high,” Stéphanie Lapierre, QPAREB’s chief economist, said Thursday in Montreal during an online presentation. “The second half should compensate for this early weakness, and we could see a small increase in prices because inventory remains low.”

Some 35,230 residential real-estate transactions are expected to be concluded in metropolitan Montreal next year, compared with this year’s estimated tally of 36,285, QPAREB says. Home sales in the area have declined every year since 2021.

Residential property sales across the province will probably drop two per cent next year, QPAREB also predicts. Median prices for single-family homes across the province should end 2024 little changed.

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Next year “will be the first real year of resale market stabilization,” the association says.

Key assumptions built into QPAREB’s forecast include an expectation that interest rates will start declining progressively sometime in 2024, and that unemployment in the province will climb to 5.3 per cent on average from about 4.3 per cent currently.

As the economy slows, joblessness rises and property prices remain high, home sales will probably slump at the start of the 2024, QPAREB says. New listings are likely to increase as a result, giving would-be home buyers more power to negotiate better terms, the association says.

Still, the dip will probably be short-lived. Transaction activity “should be very reactive to the first announcements of rate cuts, leading to a more decisive market upturn later in the year,” said Charles Brant, QPAREB’s head of market analysis. Strong migratory inflows and the prospects of an economic recovery should also underpin demand, he said.

“What matters is the common belief in the market,” Marc Lefrançois, a chartered broker at Royal LePage Tendance in Montreal, said in an interview. “If inflation starts stalling, the Bank of Canada is going to react. Once people realize that rates are going down, they will start trying to buy their way back into the market.”

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Housing across Greater Montreal remains in short supply, and the situation is unlikely to improve anytime soon. Montreal is the Canadian city where housing starts fell the most during the first half of 2023, government data show.

“There’s not a lot of product out there for the amount of people who want to move into a property,” Lefrançois said. “Our view is that this imbalance between supply and demand is going to keep pushing the market upward.”

Relatively weak activity levels in Greater Montreal haven’t significantly affected prices. QPAREB forecasts median price increases of two per cent for single-family homes and one per cent for condominiums next year.

The median price of a single-family home in Montreal will probably rise to $549,400 by the end of 2024 from an estimated $539,800 currently, QPAREB says. The median price of a condo is projected to hit $395,600, up from $390,200.

Royal LePage is more optimistic in its own 2024 market forecast, also released Thursday.

Aggregate home prices in Greater Montreal will probably advance five per cent year-over-year by the fourth quarter of 2024 to $610,260, the brokerage firm said. During the same period, the median price of a single-family detached property is projected to rise 4.5 per cent to $684,998, while the median price of a condominium is forecast to climb six per cent to $471,912.

Royal LePage calculates aggregate prices by using a weighted average of the median values of all housing types collected. The numbers include both resale and newly-built house prices.

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