According to the Metropolitan Outlook: Autumn 2018 report by the Conference Board of Canada, Montréal is the metropolitan growth leader in Canada this year. What does this mean for the city’s housing market?
"For the first time since records began in 1987, Montréal will boast the fastest growing metropolitan economy this year among the 13 cities covered in this edition of our report," says Alan Arcand, Associate Director, Centre for Municipal Studies. "The local economy is enjoying widespread gains this year, accompanied by continued robust job creation and solid income growth. But like most other cities in Canada, economic growth is set to moderate in Montréal in 2019."
The real GDP is expected to jump 2.9% in Montréal this year, mostly due to non-residential investment fuelling job creation and healthy population growth. The tightening labour market equates to wage gains, which leads to more spending.
When there’s higher spending and strong consumer confidence, the new home construction market flourishes. So, builders have been happy in Montréal this year. This could inspire more investors to look to Montréal for more opportunities. As the population grows and more people are buying homes, the manufacturing industry, arts & entertainment, and accommodation & food services have also seen an uptick in activity.
All that said, the Conference Board of Canada expects economic growth to moderate beyond this year due to the aging population, higher interest rates, and heavier household debt. This will all lead to less spending, which means there will likely be fewer new home sales next year. 2019 will still be strong though with economic growth expected around 2%.
How does Toronto compare? Economic growth is increasing 2.3% this year, and 2.4% growth is expected for next year. But, rising interest rates and high household debt is limiting retail growth, and will likely slow new home purchases. Government cooling measures had a lot to do with the moderation of homebuying and in the near-term, slow growth is expected for the housing market.
It’s a similar story in Hamilton. The federal stress test is limiting growth in the housing market, and uncertainty in the steel industry, on which the city relies heavily, is weighing on consumer confidence.
Montréal, Toronto, and Hamilton are all growth leaders, and while moderation is expected in 2019, it looks like all three cities are still reliable places to invest, whether you’re looking to move, start a family, or grow your portfolio.