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It looks like the real estate buying frenzy is finally starting to subside. While homes in Montreal are still selling much faster than before COVID-19 – in June more than twice as fast, on average, than last year – real estate brokers, especially those outside of the city, say they are not seeing the same intensity of competition among buyers as a few months ago. The pace of growth in sales and prices also appears to be slowing.

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It’s not just Montreal. Engel & Völkers’ annual report on the Canadian mid-year luxury real estate market, released late last month, described a “wave of market normalization” in major cities across the country as a result. unprecedented sales growth of over $ 1 million in the first half of the year. .

Sales of luxury homes in Montreal increased 134% year over year from January to June. Yet in May and June, new listings in Montreal received fewer visits and offers than at the start of the year, the report notes. While bidding wars were still fairly common, competition was more likely to be between a few buyers, not dozens.

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According to real estate broker Patrice Groleau of Engel & Völkers Montreal, competition for properties in the outer suburbs appears to be diminishing as more homes hit the market, but he said the demand for high-end properties in the city remains strong because there is so little supply.

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“It will be a soft landing for entry-level real estate,” said Groleau. “The luxury segment still has a lot of momentum going.”

While the pandemic has prompted many Montrealers to make drastic lifestyle changes, such as moving out of town to a bigger house in the country or buying a second home in a country of cottages, with vaccination rates in rising and a reopening well underway, Groleau said it is all the rage to buy a place in the city again.

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“People made permanent decisions in a temporary situation,” said Groleau. “It was easier to get out (of the city) but coming back will be more difficult.”

In the most recent quarterly market update from the Professional Association of Real Estate Brokers of Quebec, analysts pointed to the same trend and noted that the acceleration in prices observed over the past year in Montreal is not long-term sustainable.

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Director of Market Analysis Charles Brant said affordability issues caused by increases in mortgage rates, market easing measures implemented by governments and changing spending patterns in As the COVID crisis eases, it will likely lead to lower sales levels by the end of the year.

“Although records were still set in the second quarter of 2021, the pace of sales growth has slowed,” said Brant.

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The reprieve may only be temporary, however, due to pent-up demand for Canadian real estate from international buyers shut out of the market due to COVID-19 restrictions.

Because international borders have been closed since the start of the pandemic, the Engel & Völkers report predicts that when international travel resumes, there will be new interest from foreign buyers looking for metropolitan areas in Canada – especially in Vancouver and Montreal. With a relatively low supply of luxury properties available in both cities, a new wave of international buyers could “strain the market”, the brokerage’s report notes.

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Montreal is expected to be the next favorite for investors in Canada. Prices are still well below those in Vancouver and Toronto, and the city is also on the verge of a development boom, the report notes, with around 60,000 new construction projects expected to enter the market over the years. next three years.

While some international buyers buy vacation homes or properties they can rent, most in Montreal buy a home to live in, either for themselves or their adult children, Groleau said. Even though they don’t intend to stay in Canada permanently, because Canadian homeowners don’t pay capital gains tax when they sell their primary residence, real estate is a convenient investment. for those who can afford it.

“If you have the money and you’ve come here, you compare the price in London, Paris, etc. (Montreal) is still much more affordable than most major cities in the world, ”said Groleau.