Montreal emerged as the surprising hot spot for luxury real estate in Canada this summer with agents reporting bidding wars in several of the city's central affluent neighbourhoods.
But a new forecast from Sotheby's Canada predicts sales activity in the high-end markets of Vancouver and Toronto will jump back up this fall as the country's economy picks up steam. And that means Montreal's strong luxury-home-sales numbers from the past two months could be eclipsed by momentum in Canada's other major cities.
Sales of Montreal properties priced at $1-million or more soared 60 per cent year-over-year to 115 transactions in July and August, Sotheby's International Realty Canada said in a report to be published on Tuesday. That compares with a 39-per-cent decline in the Greater Toronto Area, a flat market in Calgary, and a 5-per-cent gain for million-dollar-plus properties in Vancouver, the brokerage said.
"Montreal has always suffered a bit from a shadow of political instability and I think over the last number of years, confidence continues to build in the Montreal market in terms of shedding that concern," said Brad Henderson, who heads Sotheby's in Canada. "We're seeing a growing demand and a less-than-growing supply of homes."
About 24,859 residential properties worth $8.9-billion changed hands in Montreal through the first six months of the year, according to the Quebec Federation of Real Estate Boards. Data from June, 2016, to May, 2017, show momentum was strong for homes and condos priced at $1-million or more, even if they accounted for only 1.4 per cent of total sales.
Among the high-end properties on the market in the Montreal area in recent weeks were musician Béatrice Martin's Plateau residence for $1.25-million and Montreal Canadiens captain Max Pacioretty's Brossard home, which fetched $1.75-million.
Record-low unemployment and a high level of consumer confidence are fuelling demand for housing in Montreal as companies add jobs and household incomes climb. Royal Bank of Canada this month upgraded its growth forecast for the Quebec economy to 2.8 per cent from 1.9 per cent previously, saying this would constitute the strongest growth rate for the province in 15 years.
"People are buying with little worry" of price declines, said Stéphanie Dumoulin, an agent with Groupe Sutton in Montreal who specializes in high-end condos. She said this week alone, she's sold two penthouses for $1.7-million and $2.6-million. "Buyers understand that prices have climbed a lot in some other parts of Canada and that in Montreal, they get a lot more for their money."
Although they remain a limited part of the property picture, foreign buyers are pushing into Montreal's market in increasing numbers and much of their interest is in luxury housing, agents say. Quebec does not have a 15-per-cent tax on foreign buyers, as Toronto and Vancouver do, and that has shifted some activity to the province, they say.
Chinese buyers are particularly active and they're interested in Montreal's Westmount, Town of Mount Royal, Brossard and Nôtre-Dame-de-Grace areas especially, said Yi Lu, an agent with Engel & Volkers. The Globe and Mail reached him Monday while he was showing a Chinese buyer a residence in Westmount.
"They want to be in nicer neighbourhoods," Mr. Lu said of his clients. "But it's not really just the luxury. It's the school, the environment, the accessibility of the area."
Montreal's high-end market will continue to be strong, but it will be overshadowed in the fall by rebounds in Vancouver and Toronto, according to Sotheby's. The Canadian economy expanded at its fastest annualized rate in six years between March and June, Statistics Canada said, outpacing earlier projections. Ontario powered Canada's national employment gains in August with 31,100 net new jobs.
"When we have this conversation in January, we'll be looking back and saying there was a temporary lull in Vancouver and Toronto and both of those markets have come roaring back," Mr. Henderson predicted. "[They won't go] as high as they went, either last year in Vancouver or this year in Toronto. But lower will be the new normal."