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Royal LePage increases year-end price forecast for Greater Montreal, as buyers return en masse ahead of impending interest rate cut

The company forecasts the aggregate price of a property in the region will increase 8.5% in the fourth quarter of 2024 compared to the previous year, offsetting the financial benefit of imminent interest rate cuts

  • The stronger-than-expected market recovery has resulted in a 5.1% appreciation in the aggregate price of a property in the region in Q1 2024, compared to the first quarter of 2023
  • All sectors of Greater Montreal posted aggregate price increases in excess of 2.0% year over year
  • Buyers who had previously been priced out of the market quickly returned at the start of the year, in a race against the clock to seize the opportunity before home price appreciation accelerates
  • Elsewhere in the province, all real estate markets recorded a more vigorous recovery in terms of activity and prices than anticipated

MONTREAL, April 12, 2024 – According to the results of the Royal LePage® Home Price Survey and Market Forecast released today, the first quarter of 2024 proved to be more active than expected in the Greater Montreal real estate market, and across Quebec, as spring temperatures and the expectation of an upcoming interest rate cut prompted buyers to accelerate their property searches. During this period, the aggregate[1] price of a property in Greater Montreal rose 5.1% over the same quarter in 2023 to $579,300, up 2.2% on a quarterly basis.

“Our last market forecast was accurate, even conservative. Faced with an ongoing housing shortage and widespread anticipation that the Bank of Canada is preparing to lower its overnight lending rate in 2024, we warned last December that pent-up demand would return to the market well before interest rates fell, and that’s exactly what happened in the first quarter of the year,” said Dominic St-Pierre, Senior Vice President, Business Development, Royal LePage.

“Expecting that rates could begin to dip around June, buyers rushed and resumed their home buying plans in a race against the clock, hoping to close on their transactions just as financing costs began their descent,” adds Mr. St-Pierre. “The problem is that with inventory still well below the needs of the growing population, many buyers had the same idea, which pushed prices up significantly in the space of a single quarter. The window of opportunity will close fairly quickly for those hoping to take advantage of the market slowdown and lower financing costs, particularly for first-time buyers whose purchasing power continues to erode. In addition, the rental market will continue to face price increases in 2024, adding to the challenge for renters wishing to unlock the doors of home ownership.”

When broken out by housing type, the median price of a single-family detached home rose 7.3% in the first quarter of 2024 compared to the first quarter of 2023 to $661,100, posting a 5.0% increase on a quarterly basis. As for condominiums, the median price saw a modest increase in the first three months of 2024, rising by 2.6% compared to the same period in 2023, and increasing by 2.7% between the fourth and first quarters to $462,300. Price data, which includes both resale and new build, is provided by RPS Real Property Solutions, a leading Canadian real estate valuation company.

Return of multiple offers 

According to Marc Lefrançois, chartered real estate broker, Royal LePage Tendance in Montreal, the first quarter of the year was marked by the notable return of buyers who had abandoned their property purchase plans last year in response to numerous interest rate hikes.

“The upturn in activity has been rather drastic in Montreal’s residential real estate landscape in the first few months of 2024,” noted Lefrançois. “Demand has intensified largely as a result of rising consumer confidence in the economic outlook, most notably in terms of the improved inflation figures of recent months and the highly anticipated interest rate cuts by the Bank of Canada. With the number of properties for sale still too low, multiple-offer scenarios have made a comeback, creating overbids in some cases and keeping the region in a sellers’ market, particularly in the sub-million-dollar property segment.”

The interest rate factor 

A recent Royal LePage survey, conducted by Leger,[2] also showed buyers’ enthusiasm for the real estate market, despite rising borrowing costs over the past two years. Since the Bank of Canada began raising its key lending rate in March of 2022, more than one fifth of adults in the province of Quebec (21%) have been active in the market, and more than half of them (62%) say they’ve been forced to postpone their property searches due to rising interest rates.

Of those buyers who have had to postpone their purchase plans, 50% say they will resume their search if interest rates start to fall (more than 450,000 Quebecers[3])  – 6% say a cut of just 25 basis points will prompt them to return to the market, 14% say they are waiting for a drop of 50 to 100 basis points, and 30% say they are counting on a rate cut of more than 100 basis points before considering resuming their search.

“These projections do not take into account the pent-up demand we are already seeing even before the first interest rate cut,” said St-Pierre. “There is therefore no doubt that the real estate market in 2024 will be stronger than in 2023 in terms of sales and prices.”

Royal LePage predicts new wave of price growth for spring market

With the highly anticipated decline in the Bank of Canada’s key interest rate between now and the fall, Royal LePage predicts that buyers who have stayed on the sidelines for the past year, waiting to take advantage of lower borrowing costs, will soon face tight competition for a still-limited supply of properties, triggering a rebound in activity and property price appreciation.

In the Greater Montreal region, the company expects the aggregate price of a property to increase 8.5% in the fourth quarter of 2024, compared to the same period in 2023, to $614,978. This forecast has been upgraded since its publication in December, taking into account stronger-than-expected activity in the first quarter of the year.

“The real estate market is destined for a new period of price growth across the country and the province,” said St-Pierre. “While many buyers previously pushed out of the market because of rising interest rates will try to return at the first sign of falling borrowing costs, competition over a chronically low supply of available properties is likely to push values upwards, erasing the short-lived opportunity expected by buyers.

“Although inventory is set to grow over the coming months as sellers will also want to take advantage of increased competition from buyers, appropriately-priced properties on the market will likely be bought up quickly, once again leaving many potential buyers empty-handed,” adds Mr. St-Pierre. “As the central bank’s key lending rate is expected to be lowered gradually to the tune of 75 to 100 basis points by the end of 2024, demand will certainly continue to intensify throughout the year.”

According to the most recent projections for housing starts, Quebec and its largest market should see slight increases in new construction, whereas 2023 was marked by declines of more than 30%. However, these improvements will be insufficient to close the gap between supply and demand. 

Provincial overview

In the first quarter of 2024, most Quebec real estate markets saw a more vigorous recovery in terms of activity and prices than expected. Widespread anticipation of a downward adjustment to the Bank of Canada’s key lending rate later this year stimulated an early return of demand from buyers pushed out of the market as interest rates rose.

The Trois-Rivières region posted the strongest year-over-year increase in the aggregate price of a property, rising 12.1% in the first quarter of 2024 to $339,300, representing a 3.5% appreciation on a quarterly basis. Over the same period, the price of a property in the Greater Montreal Area rose by 5.1% over the first quarter of 2023 to $579,300. The Quebec City, Gatineau and Sherbrooke real estate markets also made gains, appreciating by 7.7%, 6.8% and 5.7%, to $366,800, $438,700 and $366,900, respectively.

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Royal LePage National House Price Survey Chart: rlp.ca/house-prices-Q1-2024
Royal LePage National Forecast Chart:

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About the Royal LePage House Price Survey

The Royal LePage House Price Survey provides information on the most common types of housing, nationally and in 63 of the nation’s largest real estate markets. Housing values in the Royal LePage House Price Survey are based on the Royal LePage Canadian Real Estate Market Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Additionally, commentary on housing market trends and data on price and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.

About Royal LePage

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of approximately 20,000 real estate professionals in over 670 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage® Shelter Foundation™, which has been dedicated to supporting women’s shelters and domestic violence prevention programs for 25 years. Royal LePage is a Bridgemarq Real Estate Services® Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.

Royal LePage® is a registered trademark of Royal Bank of Canada and is used under licence by Bridgemarq Real Estate Services® Inc.

For more information, please contact:
Roseline Joyal-Guillot
Director of Marketing & Communications

[1] Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions and includes both resale and new build.

[2] Royal LePage commissioned Leger to conduct an online survey among 1579 Canadians, (including 365 in Quebec), 18 years of age or older, via Leger’s online panel, LEO. The data was collected from January 26 to 28, 2024. No margin of error can be associated with a non-probability sample (i.e. a web panel in this case). For comparative purposes, though, a probability sample of 1579 respondents would have a margin of error of ±2.5%, 19 times out of 20.

[3]Statistics Canada, Population estimates on July 1, by age and gender (Quebecers aged 20 years old or more)