Ontario’s Fair Housing Plan, a suite of new measures meant to stabilize the red-hot housing market in the province, includes a 15 per cent tax on property purchased by foreign buyers. According to the Quebec Federation of Real Estate Boards (QFREB), this change may increase the presence of foreign buyers in the Montreal real estate market. However, the QFREB does not anticipate any major short-term impacts.
Canada Mortgage and Housing Corporation (CMHC) data estimates that Montreal’s proportion of foreign buyers only sits at 1.5 per cent. While this figure might be underestimated, the proportion remains quite low. In comparison, the percentage of foreign buyers in the Vancouver region is estimated at 9.7 per cent, while in Toronto it is likely around 4.9 per cent.
In Montreal, foreign buyers would likely purchase properties in central neighbourhoods for single-family homes and the downtown core for condominiums.
“Activity by foreign buyers in the Montreal area could have an upward impact on property prices in some central neighbourhoods, as this is where they tend to concentrate their purchases,” said Paul Cardinal, manager of the QFREB’s Market Analysis department. “However, the impact would be limited given that Montreal’s real estate market conditions are very different than those observed recently in Toronto and Vancouver.”
The residential real estate market in the Montreal Census Metropolitan Area (CMA) has seen moderate price increases in recent years, with the median price of single-family homes climbing six per cent from $279,000 to $295,000 between 2013 and 2016. The median price of a condominium also increased by six per cent over the same period, from $227,000 to $240,000.
The Montreal real estate market remains relatively balanced overall, as the single-family segment remains slightly in favour of sellers, the plex market is balanced, and condominiums remain in slight oversupply. In the rental market, Montreal’s vacancy rate is 3.9 per cent, according to CMHC, which is much higher than Toronto’s 1.3 per cent and Vancouver’s 0.7 per cent. Although more foreign buyers are arriving in Montreal, resulting in a significant increase in net migration and the number of non-permanent residents in 2016.
“We are far from a housing shortage, whether it be the resale, new construction or rental markets. In this context, it is difficult to envisage a surge in prices like Toronto,” added Cardinal.