Article written by Michael Lemelin, Mortgage Broker
T. 514.819.2243
E. michael.lemelin@archyp.ca
The Montreal residential market experienced turbulence in 2022 and 2023, marked by inflation and rising interest rates. These factors have led to a reduction in new construction, reduced borrowing capacity for households and a reduction in real estate sales. At the same time, demand for rental housing has exploded, far outstripping supply and causing unprecedented rent increases.
However, there is a wind of optimism for the year to come. Experts anticipate a gradual decline in interest rates and a moderate rise in construction costs, which could revitalize residential investments. Housing starts are expected to stabilize and experience a slight rebound in 2025 and 2026, although this remains insufficient in the face of constantly increasing demand, particularly due to the influx of immigrants and non-permanent residents.
Population growth, supported by international migration and non-permanent residents, continues to drive housing demand in the metropolitan area. Despite a slight drop in mortgage rates, the resale market is expected to experience moderate price growth, which maintains homeownership as a major issue.
The rental market, for its part, remains tense with supply struggling to meet growing demand. Rents are likely to continue to rise, exacerbating affordability problems.
In 2024, housing starts should stabilize, marking the end of a period of decline. However, a significant recovery in residential construction is only expected from 2025. Rental housing remains the driving force behind construction, with developers on the lookout for opportunities, especially in the suburbs where land costs are more affordable.
The condo sector, however, may see a slower recovery due to weakened demand. Detached, semi-detached and row houses should see their housing starts remain stable, despite increased demand and a lack of available land.
In summary, although the Montreal residential market can hope for a slight improvement in financing conditions, affordability remains a major challenge. Potential buyers and renters will have to navigate a market where supply is struggling to keep up with demand, and where costs, both purchasing and renting, continue to pose significant obstacles.
For more information and detailed data, readers can consult the following sources:
– Canada Mortgage and Housing Corporation (CMHC)
– Professional Association of Real Estate Brokers of Quebec (APCIQ)
*It is important to note that these forecasts are based on data available as of March 21, 2024, and that market conditions are subject to change.
