Canada’s housing market ranking is tumbling, according to Knight Frank’s third-quarter report. The country has fallen to number 44 on the global housing market rankings after ranking 10th last year and number 4 in 2016.
The decline is primarily driven by policy changes purposely designed to slow hot markets in Ontario and British Columbia. These changes include the mortgage stress test, foreign buyers taxes and higher interest rates.
The markets in Toronto and Vancouver have cooled off. In July of this year, the average condo in Toronto went for $561,097. By comparison, a condo in the U.S.’s Myrtle Beach costs $200,000-$300,000 for an oceanfront unit. Since reaching a peak, both Toronto and Vancouver markets have fallen from first to 137th in rankings between Q2 of 2017 and 2018.
Despite these troubling figures, the Chartered Professional Accountants of Canada say a housing collapse is unlikely.
Toronto and Vancouver markets may be cooling off, but Quebec’s residential real estate market is expected to soar in 2018 and 2019. According to the Quebec Federation of Real Estate Boards (QFREB), the residential market achieved record sales in 2017 and that record will be shattered this year.
Quebec has seen a 5% increase in sales, all categories combined. Sales British Columbia declined 28% in 2018, and sales in Ontario fell 18% during the same period.
Buyers have more bargaining power in Quebec City, Saguenay and Sherbrooke. In Montreal and Gatineau, it’s a seller’s market. And in Trois-Rivières, the market is balanced.
Montreal is leading the rest of the province. This year saw record sales, higher prices and a decline in time to sale. Condominiums are the hottest category in this market.
The suburbs are seeing the most growth, with a 12% growth in South Shore and a 7% growth in Laval. North Shore saw a 4% increase in sales.
Quebec’s strong labour market, high consumer confidence and rising disposable income will boost home sales next year, according to QFREB. Mortgage rates will continue to climb next year, with rates hitting 6%.
The QFRB expects a 1% increase in the number of transactions next year to hit a record of 87,650 sales. The median cost of a single-family home is expected to rise 3% to hit $257,000.
The number of transactions in the Montreal market is projected to hit a new high next year, reaching 47,600. Price growth will also be steadier, with a 4% increase in median price expected. The median cost of a single-family home in Montreal is expected to hit $332,000.