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For the last few years, there’s been a steady decline in the number of properties listed on the Montréal resale market. Starting in 2016, this decline has been 4% to 7% per year, and has led to scarce housing supply.
Scarce supply, along with increased demand, has led to housing market overheating in Montréal. (Overheating happens when the gap between demand — represented by sales — and supply — represented by new listings — is relatively small on the resale market.)
Our latest Housing Market Insight (HMI) for Montréal looks at trends in new listings since 2004, and the reasons for their recent decline.
Strong demand reducing the number of available homes
In 2016 and 2017, the decline in new listings was mainly due to fewer single-family homes being listed for sale. In 2018, though, the decline was mainly due to a drop in new condominium listings.
One of the reasons for this decline: strong demand on the real estate market. In the past, existing properties would be relisted for sale more than once a year because they hadn’t found buyers. For the past few years, this has been happening much less frequently.
Lower levels of construction are another factor affecting supply
Another factor reducing the number of available homes is a slowdown in construction. The construction of single-family homes and condominiums has been relatively weaker in recent years. This means that there are fewer units that can potentially be resold by their initial buyers.
Developers selling more condominiums themselves
The number of new condominiums that real estate brokers were hired to sell fell considerably in 2018. This was especially true on the Island of Montréal. It’s possible that high housing demand and the resulting strong market encouraged developers to sell their units themselves.
Now, because of the way resale market listings are counted, these condominiums, no longer handled by brokers, wouldn’t be counted as new listings.
Future impact on the housing market
Because of these factors, it’s hard to foresee an increase in new listings, at least in the short term. If demand stays strong, pressure on house prices should stay steady, and affordability issues will remain an important issue.
