Steady price growth along with the possibility of further rate hikes will affect hopeful home buyers in Montreal much more acutely, according to market observers.
In a recent analysis, Desjardins senior economist Hélène Bégin reported that the Bank of Canada might hike its benchmark rates two more times next year, leading to higher mortgage rates that would definitely represent a considerable chunk of buyers’ funds.
While healthy in terms of magnetizing better investment, the trend will put first-time buyers at a severe disadvantage, according to Quebec Federation of Real Estate Boards manager of market analysis Paul Cardinal.
“It’s going to limit the amount they can borrow, so it’s going to limit the increase in prices, they will have to make a compromise, sometimes it means a smaller dwelling, sometimes it means going further from downtown but I think they will still be on the market,” Cardinal told the Montreal Gazette.
“All the areas of the Montreal metropolitan area will be hot and remain hot in 2019, including the island of Montreal, but there is a little more supply in the suburbs and we will see a lot of first-time buyers want to get into the market now because they fear that the mortgage rates will go higher, so I think the suburbs will have growth in sales a little bit stronger than the island of Montreal in 2019,” Cardinal added.
The QFREB stated that the city’s prices will break new records this year and the next, although at a pace slower than 2017’s fevered pitch.
The average sale price of a single-family property in Montreal is projected to increase 3.2% annually by the end of this year (up to $320,000), if the growth rate of the first 10 months of 2018 maintains its course. This would be considerably slower than last year’s 7%.
Price growth in 2019 is estimated to be at 4% (up to $332,000).
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