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It is the first time since June 2021 that prices have fallen in two consecutive months
Homes for sale or for sale in Westmount, Montreal. Photo by Dave Sidaway/Montreal Gazette Files
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Montreal home sales and prices eased in May in what local realtors are calling a “turning point” as rapidly rising interest rates and a surge in new active listings changed market conditions.
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The average price of a single-family home in Montreal in May fell less than 1 percent from the previous month to $576,000, according to data from the Quebec Professional Association of Real Estate Brokers. It is the first time since June 2021 that prices have fallen in two consecutive months. However, the average house price is still 16 percent higher than in May last year.
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The condominium market remained resilient, with the median price in May largely flat from April at $410,000 and up 12 percent year-on-year.
A total of 4,874 homes changed hands in May, down 9 percent year-on-year and down nearly 5 percent since April. New active entries also jumped, rising to 11,304 from April’s 10,454.
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“Nevertheless, market conditions remain very tight to the advantage of sellers, with overbidding rates still very high, particularly in the outskirts of the island of Montreal,” he said. “The observed changes in market dynamics are precisely explained by the extremely high prices combined with a rapid increase in interest rates, whether fixed or floating.”
The Bank of Canada’s aggressive rate hike path, including the 50 basis point hike on June 1, has made it harder for prospective homebuyers to qualify for a mortgage in the Montreal market, Brant said.
“The sharp price increases will therefore become increasingly anecdotal over the next few months, with an overbidding that is bound to fade,” he said.
Montreal joins other housing markets across Canada such as Toronto, Vancouver and Calgary, where rising interest rates hurt mortgage demand and weighed on property value growth. Toronto, which also released May market data this week, was hit particularly hard by a shift in demand as prices fell for a third straight month.
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