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Residential real estate | Files to follow in 2022



The rise in interest rates, their impact on prices in Montreal, overheating in the regions and the decisions of elderly households to break down or not: these are the issues to follow in the residential market over the next year.

Tuesday was the annual Window on the Real Estate Market event organized by the Professional Association of Real Estate Brokers of Quebec (APCIQ). Economists and market analysts have released their forecasts for 2022.

Rising interest rates

Prepare to pay more for your mortgage payment. At the National Bank Financial Markets, we are preparing for a hike in key rates in the country next March. This 25 basis point hike will be followed by five more hikes until March 2023, which will bring the Bank of Canada’s key rate to 1.75% in March 2023.

“It’s startling, six increases, recognizes Matthieu Arseneau, CEO and deputy chief economist, but the pace that I am suggesting to you here is about the average pace that we have observed on a historical basis. [lors des précédentes périodes de resserrement monétaire] taking into account labor market fundamentals and inflation. We would not be surprised to witness a standardization process comparable to what we have seen in the past. ”

Price evolution

Due to the increase in the cost of money and, above all, the recent too rapid rise in house prices, the director of the APCIQ’s market analysis department, Charles Brant, believes that inflation real estate prices will be braked as early as next year.

In Quebec, prices climbed 13% and 23% in 2020 and 2021, respectively. Mr. Brant expects a price change of just 3% province-wide in 2022. The main reason: buyers in the Montreal area have already stretched to the limit. The effort rate of buyers – the share of mortgage payment is close to 40% of disposable income – exceeds that recorded during the previous real estate bubble in 1989.

With the expected increase in interest rates of 145 points in one year on the long-term rate, Mr. Brant calculates that it will cost an additional $ 360 per month to finance a house bought at the median price in the Montreal area.

“You think there’s going to be some price growth during the first few months of the year and then eventually there could be a correction, hence the average figure of 3%,” explains Brant, in a meeting. It is especially in Montreal that the adjustment will take place, ”he explains. The Gatineau market is also showing worrying signs.

The situation in the region

With teleworking helping, some mid-sized cities located more than an hour from major cities have seen a surge in popularity this year. The price increases were accordingly. “The single-family category is being taken by storm: it is recording unbearable price increases. The generalized integration of teleworking is proving to be a major trend. However, a rebalancing is to be expected based on the real costs associated with it, ”said APCIQ economists Charles Brant and Michaël Simard during their presentation.

Elderly households

The home market is expected to remain very strongly seller-friendly due to a lack of properties to sell. For a rebalancing, one hope would be that the elderly households decide to sell their house which has become too big to be rented or to buy a smaller dwelling. Inflation could also convince retirees to take action. The purchasing power of retirement annuities is eroded, which could encourage the sale of the house and the monetization of the capital gain on the property to compensate for the shortfall.

“My advice for 2022? I would say: don’t hesitate to sell. Sell, suggests Charles Brant. Now is the time to sell before the market is possibly less favorable. Quite a few potential buyers have frozen their rates with their bank in order to be able to buy. In this context, why not sell? [En 2022], rotation should be easier for sellers who have just sold and want to buy another property in less stressful market conditions, with less bidding. ”

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