For the first time since 2008, average prices of condos in the Greater Montreal Area tumbled, due largely to tougher mortgage rules and an increase in the amount of inventory, according to a recent report from the Greater Montreal Real Estate Board.
Previously known as a real estate hotbed, the median prices for condos in Montreal dropped 1 per centin August, bringing down unit prices on average from $227,000 to $224,500, according to statistics from the real estate board.
Sales of all types of properties also dropped by 7 per cent, marking the first major regression in 15 months.
The report appears to run counter to a recent Genworth forecast that painted a rosier picture for the condo market in that city and other Canadian municipalities.
Also, earlier CMHC also reported a jump in multi-unit pre-sales activity in the Greater Toronto Area, suggesting that Canadian builders have little fear of a slowdown.
However, analysts believe that the fall can be attributed to a small correction in Montreal’s housing market. However, the board states that it is too early at this point to assume that this decline will become a trend.
Although a 1 per cent decline is usually not a major issue, declines of any kind are somewhat of a rarity in the Montreal housing market. Retreats in prices in that market usually take place during recessionary periods.
Investors usually find Montreal to be a great place to invest in. The city’s European charm and affordable property prices have made the city a magnet for buyers over the years.
But given that prices have now fallen for the first time in four years, smart investors may want to consider holding off on making any major purchases in the Greater Montreal Area until the market returns to normal.