Housing Market Insight — Montreal

Downtown Montréal sets itself apart from the rest of the Montréal condominium market for a couple of reasons. Firstly, a significant proportion of buyers on the downtown condominium market don’t use their units as their principal residence. These types of buyers are commonly called investors.

Secondly, in the last few years, very large high-rise condominium apartment buildings have been appearing on the downtown market. The construction of these large high-rise condominium buildings seems to be a trend. More projects of this type are being built or are planned in the next few quarters.

Future impact on the downtown Montréal condominium market

Greater numbers of these high-rise condominium buildings will likely have an impact on the downtown Montréal housing market. For this reason, it would be important to look at unit sales and rentals in these buildings.

Analyzing currently available data on these buildings is an interesting first step in this direction. The latest Housing Market Insight for Montréal takes this step and looks to answer the following questions:

  • Out of all buyers in these buildings, what proportion are investors?
  • Are there any quick resales (within 6 or 12 months)?
  • Are rental condominium cash flows positive?

The answers will help us better understand the condominium market in downtown Montréal.

Highlights of our findings

Our analysis revealed some interesting findings:

  • The proportion of investors in the very large high-rise condominium apartment buildings in downtown Montréal was 57%. This was greater than the proportion in the other condominium buildings in the same area (about 30%).
  • The proportion of condominiums that were resold within 1 year was 7.2% in the very large downtown high-rise buildings. This was greater than the proportion in the other condominium buildings in the same area (only 1.8%).
  • However, the percentage of sales resulting in a loss was slightly greater in these very large high-rises (about 15%). In the other condominium buildings in downtown Montréal, it was 5%.
  • Certain investors bought a condominium in one of these downtown high-rises in order to rent it out. Our estimates suggest that, in most cases, those who would have made a 20% down payment would have had a negative cash flow. In other words, the operating expenses (mortgage payments, condominium fees and taxes) exceeded the rent collected.

Date Published: December 4, 2018