As a result of rising prices, it is increasingly difficult for young households to access property. And this does not bode well for the future because of the next bullish wave in the residential sector, a wave that will result in falling interest rates.
Let’s take the example of a single-family home. According to APCIQ’s September press release, the median price of a single-family home in Quebec is now $450,000. This is $191,000 more than five years ago. Up 74%, no less!
Do you know what an increase like this really means in terms of increasing your mortgage payment each month? The new buyer will have to pay about $1,055 more per month than they did 5 years ago. Each year, this represents an additional mortgage cost of $12,660.
Here is the detailed explanation of the additional $1,055 payable each month. After a minimum down payment of $22,500 (or 5% of $450,000), a mortgage of $427,500, compounded over 25 years at a 5% rate, will cost $2,486 per month. 5 years ago, when the same house was worth $259,000, it cost $1,431 per month to finance it with a mortgage of $246,050, after the minimum down payment of $12,950.
I support them
Because it is more financially accessible than single family homes, the median price of a condominium in Quebec now reaches $377,000, compared to $262,000 in 2019. In 5 years, the median price of a condominium has gone up $115,000, or 44%.
A new condo buyer, after the minimum 5% down payment, today finds himself paying $635 more per month than 5 years ago, or $7,620 a plus a year.
The monthly mortgage payment will be $2,083 (for a mortgage of $358,150 after the down payment). In 2019, building the reference condo “one” would require a monthly payment of $1,448 (for a mortgage of $248,900 after a down payment).
In the areas
Quebec’s residential market has rebounded in recent months. According to the Teranet-Banque-Nationale House Price Index, prices have returned to historically high levels in the large metropolitan areas of Montreal, Quebec, Trois-Rivières and Sherbrooke.
Based on data collected by the APCIQ, here is the current median price for single family homes and condos in each of the major metropolitan areas. In messages you will find the price increase recorded from 2019.
Montreal Metropolitan Area
- Single family: $590,000 (+$235,010)
- Joint ownership: $415,000 (+$125,000)
metropolitan area of Quebec
- Single family: $400,000 (+$142,500)
- Joint ownership: $272,500 (+$85,250)
Trois-Rivières metropolitan area
- Single family: $345,000 (+$190,050)
- Joint ownership: $263,500 (+$129,500)
Gatineau metropolitan area
- Single family: $460,000 (+$199,000)
- Joint ownership: $307,000 (+$143,250)
Sherbrooke metropolitan area
- Single family: $425,000 (+$195,000)
- Joint ownership: $300,000 (+$140,050)
Drummondville metropolitan area
- Single family: $369,000 (+$204,000)
Saguenay metropolitan area
- Single family: $300,000 (+$130,000)
Other expected developments
A sharp increase of 74% over 5 years for the median price of a single-family home in Quebec and 44% for a condo obviously means a sharp increase in all other costs associated with property acquisition.
According to the latest inflation data from Statistics Canada, home insurance and mortgage insurance have increased by 96% over the past five years.
The sub-index “Property tax and other special costs” has shown an increase of 30% since September 2019. As for the sub-index “Water, fuel and electricity”, the increase is up to 46%.
The variable mortgage
With the upcoming cuts in the Bank of Canada’s prime rate, we obviously have to expect a fairly large drop in mortgage rates.
That is why it is better these days to choose a variable rate mortgage loan. For what? Because the interest rate on this mortgage will decrease as the principal rate falls.
Many economists expect the policy rate to fall to 2.75% next year, 1.5 percentage points below the current rate.
In 2019, the 5-year variable mortgage rate was 3.95%. today stands at 6.45% compared to yesterday.
But in the lucrative and competitive mortgage market, it is currently possible to negotiate a 5-year mortgage loan with a variable rate between 5.30% and 5.90%.
2024-10-19 10:15:00
#jump #years #price #singlefamily #homes #Quebec
