Montreal shifts to buyer’s market: Royal LePage

Hard hit by tougher mortgage rules, Montreal property sales slowed during the third quarter in a market that now favours buyers, Royal LePage Real Estate Services said Wednesday.

Residential prices, which were up slightly in Q3, year over year, are expected to dip by the end of 2012 - especially in the once hot condo market, where new construction continues to hit record levels. Condo inventory was up 23.4 per cent in the quarter, year over year.

“Price softening should be felt in the coming months, especially in condominiums,” said Dominic St-Pierre, director of Royal LePage for the Quebec region.

Compared to the same quarter in 2011, the average price of a Montreal home in 2012 rose:

-4.5 per cent to $287,500 for a detached bungalow.

-5.5 per cent to $387,786 for a standard two-storey home.

-.3 per cent to $236,989 for a standard condominium

Royal LePage blamed the downturn on new mortgage rules  - including a reduction of the maximum amortization period from 30 to 25 years. The change went into effect in July, when sales were already slowing in the country’s larger real estate markets. The new rules, which are applicable to CMHC-backed mortgages, hit first-time buyers who account for a third to half of the market, Royal LePage said.

“We don’t believe these measures were necessary,” St-Pierre said of the government’s tougher mortgage rules.

 According to the survey, the average price of a home in Canada rose between 1.8 per cent and 4.8 per cent in the third quarter of 2012 compared with the same period last year.