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Back to normal in the real estate market … not as fast as we think!

Manal Mouhajir

Back to normal in the real estate market … not as fast as we think!


New Housing Price Index

It is a monthly series that evaluates changes over time in selling prices for detailed specifications of identical properties for two consecutive months. The NHPI is established by contractors.

Housing affordability index

This is the ratio of total housing costs for the average household income. The index measures the portion of a household’s disposable income that is available to pay for the cost of homeownership (mortgage payments and other utility cost). The higher the ratio, the more difficult it is to afford homeownership.

Vacancy Rate

This is the ratio of vacant space to the total area of a property. A vacant area is defined as a property with availability on the date of publication.

After an eventful year in the real estate sector, new statistics show a gradual return to pre-pandemic normals in residential sales and property transfers. However, nothing is back to normal yet.

Provincially, residential sales and home transfers are down for the first time since the beginning of the year compared to the same period in 2019, with decreases of 7.6% and 6.5% respectively. However, sales and transfers have grown by 29.7 % and 26.9 %, respectively, since January of this year, but these values are still higher than the same period before the pandemic. As for the mortgage market, it remains active with more than 24,500 mortgages registered in August alone, which corresponds to a 4 % growth according to the Quebec government’s real estate market statistics. On a national level now, residential sales in the country are down by 3.5 % in the last year. This slowdown in market activity can be observed in all provinces and creates an imbalance across the country.

Where does this drop-in activity come from?

This drop in sales is simply due to a shortage of properties on the market. In addition, according to Charles Brant, Director of Market Analysis at Quebec Professional Association of Real Estate Brokers (QPAREB), the slowdown is also the result of a drop-in active listings for single-family homes to a historic low. The shrinking pool of buyers also plays a role in the ability to obtain a property at market price.

What is the market today?

Since the pandemic, we are in a primarily seller’s market. In fact, the number of properties for sale (supply) is lower than the number of potential buyers (demand). With a limited number of properties on the market, a real estate bubble forms, which creates a very high increase in market prices. According to the Canada Mortgage and Housing Corporation (CMHC), in order to reach market equilibrium, there should be approximately 8 to 10 sellers for one buyer.

The figure above shows the new housing price index and the housing affordability index over the last 5 years. The new housing price index increases drastically because of the health crisis. The affordability index, on the other hand, fell sharply at the beginning of 2020 and then gradually rise again until today.

What will tomorrow’s market look like?

According to the head of North American personal and commercial banking at the Bank of Montreal, there should be some moderation in the market for housing prices and sales. Canada’s mortgage market should remain robust for a long time. According to the Canadian Real Estate Association, their recent data shows future stability since the beginning of 2021, but rising prices will remain high due to high demand. With an increase in immigration, low-interest rates and Generation Y taking their place in the market, listings are expected to rise across the country. With the Liberal Party re-elected, their election promise is to build, preserve or renovate 1.4 million units over four years across the country to meet demand.


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ACI. (2021). Prévisions trimestrielles. L’Association canadienne de l’immeuble. 

Bank of Canada. (2021). Real Estate Market: Definitions, Graphs and Data. Bank of Canada. 

Banque du Canada. (2021). Marché de l’immobilier : Définitions, graphiques et données. Banque du Canada. 

CREA. (2021). Monthly Stats Highlights. The Canadian Real Estate Association. 

CREA. (2021). Quarterly Forecasts. The Canadian Real Estate Association. 

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 DuProprio. (s.d). The difference between a seller’s and a buyer’s market. Duproprio. 

Gouvernement du Québec. (2021). Statistiques sur le marché immobilier. Gouvernement du Québec. 

 La Presse Canadienne. (26 mai 2021). Les nouvelles simulations de crise pourraient calmer le marché immobilier, croit BMO. Le Soleil. 

 La Presse Canadienne. (4 août 2021). Les ventes de maisons en recul de 30 % à Montréal. La Presse. 

 Pirro, R. (24 août 2021). Les libéraux veulent faciliter l’achat d’une première maison. 

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