Quebec's residential real estate market is expected to cool in 2011, with the pace of new construction slowing and resale housing prices growing by a modest 2.5%, forecasts by Canada Mortgage and Housing Corp. show.
And Montreal's sizzling new condo market -- which is expected to nearly match the 10,000-unit record set in 2004 -- should slow, with the multiple-unit housing start category expected to drop by nearly 11 per cent, year over year, the CMHC said Monday.
Affordable condos, which appeal to first-time buyers, are expected to account for the greatest share of new housing in Montreal, both this year and in 2011.
But despite the movement of renters to the housing market, Montreal's vacancy rate is expected to remain stable at 2.5%, because of growth in immigration and employment among young adults.
According to the Conference Board of Canada, the Montreal area is expected to attract a net 40,000 new residents in 2011 because of international immigration -- and new immigrants tend to rent.
Overall, 21,400 new dwellings will be started in the Montreal area this year, or 11.2% over 2009. In 2011, construction is expected to get under way on 19,500 units, or a decline of 8.9% from 2010.
Although overall housing resales in the Montreal area only grew slightly in 2010, the average price for a property posted on the Multiple Listing Service is expected to rise by 7.7% to $296,000. In 2011, the average MLS price is expected to reach $303,000, up by 2.4%.
Similarly in Quebec, the average MLS price is forecast to grow by 2.5% in 2011.
The provincial results for Quebec housing starts are largely in-line with national trends.
"High employment levels and low mortgage rates will continue to support demand for new homes in 2011," said Bob Dugan, chief economist for CMHC. "Nevertheless, housing starts will decrease to levels are more in-line with long term demographic fundamentals next year."
