MONTREAL – The Greater Montreal resale market “gradually lost its momentum” during the third quarter of 2012, after tighter mortgage rules contributed to a seven-per-cent drop in sales across all housing categories, Canada’s second-largest real estate board said Tuesday.
Condo sales dropped nine per cent during the three-month period ending in September, compared with the 2011 quarter, as what was once a hot sellers’ market shifted into balanced territory, the Greater Montreal Real Estate Board said.
Across Quebec, condo sales declined 10 per cent, even as buyers were offered greater choice with listings up 20 per cent compared with the year-ago quarter.
“In July, sales increased everywhere except on the island of Montreal.
But by August the downward trend had already extended to most areas, except the North Shore, and in September all areas of the Montreal Metropolitan Area registered a decrease in sales,” said Diane Ménard, Montreal-area spokesperson for the Quebec Federation of Real Estate Boards.
“This slowdown can most probably be explained by the newest tightening of mortgage insurance rules.”
The Quebec figures follow numbers reported by the Canadian Real Estate Association this week showing a 15-per-cent drop in national sales, year over year. On a seasonally adjusted basis, national sales rose 2.5 per cent between August and September, even as new listings climbed 6.5 per cent, Postmedia reported.
As in other large Canadian cities, median prices continued to rise in Montreal year over year in all housing categories, but some analysts warn they could be artificially inflated by a disproportionate drop in the sales of less expensive homes.
In September, the median price of a condo in Greater Montreal rose an unexpected seven per cent. The Montreal board attributed the rise in price to the significant drop in sales of units worth $300,000 and less, which tanked 25 per cent, year over year.
By contrast, sales of condos priced at $300,000 and more – properties largely out of reach for most first-time buyers – dropped just one per cent, compared with September 2011.
For the third quarter, the median price of a Montreal-area condominium rose two per cent to reach $230,000, while the price of plexes jumped five per cent to $425,000.
In Greater Montreal, single family homes grew three per cent to reach $277,750.
The Montreal board couldn’t immediately say whether a similar trend was responsible for inflating median prices during the third quarter.
In July, new federal rules on insured mortgages, including the reduction of the amortization period from 30 years to 25 years – went into effect.
The shorter amortization period resulted in a rise in monthly mortgage payments, making the cost of home ownership more expensive.
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