Montreal Home Sales Forecast Raised as New Immigrants Flow In

(Bloomberg) -- Home sales in Montreal are forecast to rise a better-than-expected 4 percent in 2017 to the highest level in seven years as more jobs and new immigrants buoy demand.

Canada's second-largest city will probably sell 41,500 units this year, the most since 2010, according to the Quebec Federation of Real Estate Boards that in January had predicted a 5 percent decline. The median price of a single-family home is seen rising 6 percent to C$312,500 ($232,000), faster than last year's 2 percent gain and the 1 percent increase predicted earlier.

The outlook is bright because unemployment in the mainly French-speaking province fell to an historic low this year and the number of foreign migrants rose 10 percent. However, while Montreal's property market is showing signs of strength, it's far from the runaway gains seen in the financial hub of Toronto or Vancouver though these too seem to be cooling.

“It's still cheap to buy a house in Montreal compared to other major markets in Canada, but activity has been higher than we thought it would be this year,” Paul Cardinal, the board's market analysis manager, said in an interview Tuesday. It's “too soon” to predict if Montreal may be on the verge of its own housing boom, he said.

The board's previous forecasts were so low because it estimated that stricter federal mortgage rules introduced last year would crimp demand, which hasn't played out, Cardinal said. He added that Quebec also isn't seeing any fallout from the near collapse of Toronto-based Home Capital Group Inc. as it isn't "a main lender” in the province.

To contact the reporter on this story: Kim Chipman in Toronto at kchipman@bloomberg.net.

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Jeanette Rodrigues, David Scanlan