Real estate during the year 2013, what does 2014 hold?

The real estate market is certainly depressed in Quebec, but it is far from a disaster scenario, according to economists.

The year just ended was marked by the beginning of a soft landing for the residential real estate market in Quebec which, on the whole, experienced a rebalancing, accompanied by more moderate price increases. This soft landing is expected to continue in 2014, although, unlike in 2013, residential sales are expected to increase slightly during the year.

According to the Quebec Federation of Real Estate Boards

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(QFREB), 71,265 residential sales were completed in 2013, which represents a decrease of 8% compared to 2012. The single family, which had been the only category to post a rise in number of transactions in 2012, recorded the lowest sales decline (-7%) with 50,082 sales in 2013.

Plex sales fell by 9% with 6,015 transactions. The condominium market experienced the biggest slowdown in 2013 with 14,788 sales completed, down 10% from 2012.

The real estate market is certainly depressed in Quebec

The real estate market is certainly depressed in Quebec

But we are far from a disaster scenario, according to economists from Desjardins Group, Laurentian Bank and National Bank. We are seeing a soft landing across Canada, including in Quebec, “said Laurentian Bank chief economist Carlos Leitao Thursday.

We do not see any upside potential for home prices, that’s for sure. This corresponds with the disposable income of households, “he hinted recalling that the purchasing power of Quebecers had been cut by increases in taxes and taxes decreed last year by the Government of Quebec.

According to Desjardins Group Chief Economist François Dupuis, the real estate sector remains “a risk” for the Canadian economy in 2014. But nothing dramatic. “We see that in Quebec, prices are down slightly, just like stocks in the condo. We do not see a market crash, “he said. For Desjardins economists, the condominium market in both Quebec City and Montreal is already in correction mode. This market could cash a price drop of 5% to 10% within a year due to abundant supply, especially in the higher ranges.

Laurentian Bank economist Carlos Leitao expects mortgage rates to rise by the end of 2014. “It would not surprise me to see the posted rate of a closed five-year mortgage reach 6%. He said. Mr. Leitao is of the opinion that the fixed five-year posted rates will increase from 5.5% to 6.1% in 2014, since bond rates will rise by 100 basis points, from 1.95% to 2, 5% during the same period. Laurentian Bank forecasts are pushing bond yields to 3.25% in 2015.

In the case of a “soft landing”, stable or declining home prices are forecast over the next five years. The condominium market could see a drop in the next year of between 5% and 10% price due to too much supply, especially in the higher ranges.

Management rate and outlook for the economy in 2014

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Buyers will also be able to take advantage of an interest rate that is still very low, as the central bank left its key interest rate unchanged at 1% in the latest Bank of Canada announcement. In addition, economic growth for the second half of 2013 exceeded expectations and is expected to continue to grow from an estimated 1.8% in 2013 to an estimated 2.5% in both 2014 and 2014. ‘in 2015, predicted the central bank. As for the value of the Canadian dollar, the loonie has lost nearly 4 cents US since December 31, when it closed the year at 94.02 cents US due to a combination of factors, These include a strengthening of the US greenback, weak commodity prices and a weak Canadian economic environment with low interest rates and inflation. Good Finance of the Bank of Montreal believes that the currency is still overvalued and, therefore, any further depreciation is welcome. “

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