While Vancouver and Toronto’s housing markets will see moderation and Calgary’s market will continue to flounder, Montreal’ is anticipated to see relatively high growth in 2019 and 2020.
According to a new report by Canada Mortgage and Housing Corporation (CMHC), housing starts will remain high due to the continued strong pace of condominium and rental housing construction.
“In the condominium segment, construction will increase thanks to a steady demand supported by employment growth and also to significantly lower inventories of new and existing condominiums for sale,” reads the federal agency’s latest Housing Market Outlook.
Activity in the resale market will also see an upward trend through 2020, with factors such as expected growth in full-time employment amongst Millennials fuelling much of the demand. But some of these gains will be moderated by the anticipated rise in mortgage rates and limited supply, which will keep market conditions “favourable to sellers.”
For these reasons, the growth in the average price of homes will likely be higher than the annual average of about 2.5% experienced over the last few years.
Although condominium and housing starts will remain high, the same cannot be said for single-family detached homes. The supply entering the market is low, and land scarcity and densification trends are curbing the starts of this low-density housing type.
As for Montreal’s rental housing demand, it will increase slightly faster than supply, which is forecast to lower the vacancy rate even further.
“Demand [for rental housing] will be supported by rising net migration over the forecast horizon, mainly as a result of the significant numbers of immigrants and non-permanent residents who will settle in Montreal,” continues the report.
“As for supply, many new units will be added to the rental housing stock from now until 2019, given the high levels of starts that have been observed for more than two years now. The average rent will increase, thanks to the generally higher rents for newer apartments and also to the tighter rental market conditions, which will reduce the supply of dwellings for rent.”