For residential real estate, 2018 was the year of Quebec. While housing markets lost steam in other parts of the country, Quebec’s market remained poised as sales and prices grew.
That was one of the takeaways from data released this week by the Canadian Real Estate Association (CREA), which presented a broad picture of resale markets across Canada. The data also raised some interesting questions: For instance, in a year in which prices and sales declined in many regions, was it the average price that dropped or the price of the average house? Also, how has Quebec been able to avoid the declining trends?
CREA data shows that the nominal average housing price in greater Toronto in December 2018 was up 2.1 per cent from the year before. However, CREA’s Benchmark Home Price Index, which compares prices of similarly structured homes, revealed that the benchmark price in December 2018 was up 3 per cent. That suggests that more lower priced homes were sold in 2018.
The same index revealed that the prices in Greater Vancouver declined by 2.7 per cent but rose by 6 per cent in greater Montreal in December 2018.
The Montreal housing market is structurally different from the rest of the country. Low-rise multiplexes are the dominant housing type, and renters far outnumber owners in Montreal. The demand for townhouses and row housing is therefore greater in Montreal, which is reflected in a 9 per cent increase in their prices.
At the same time, compared with the prices in other large urban markets, housing prices in Montreal, Canada’s second-largest housing market, are significantly lower and have room for further appreciation. The average nominal house price in December 2018 was $394,000 in the Montreal Census Metropolitan Area compared with $750,000 in the greater Toronto area.
In Ontario, the total dollar volume of all residential sales in 2018 declined by 16 per cent to $108 billion — something that prompted the municipal authorities in Toronto, which levies a land transfer tax in addition to the one imposed by the province, to raise the alarm about an impending revenue shortfall expected to be $99 million.
And since the real estate industry works on commission, a 15 per cent decline in total dollar volume and an 11 per cent decline in transactions across Canada means a significant revenue loss for the real estate brokerage industry. Lower prices and fewer transactions also impact mortgage lenders who would have experienced a decline in the growth of their real estate portfolios.
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