A softening of prices expected in early 2023
The spike in property prices peaked between April and June in most regions of Quebec, until the Bank of Canada began raising its key interest rate – which has gone up five times since March of 2022 – effectively dampening buyer demand.
The Quebec City real estate market has withstood these successive interest rate increases until now. According to the latest Royal LePage House Price Survey, the aggregate price of a property in Quebec City increased 7.7% to $335,100 in the third quarter of 2022, compared to the same period in 2021. In the previous quarter, the price had reached $340,300. Although this is a slight quarterly decline, experts in the region continue to observe a dynamic market, which continues to strongly favour sellers.
“Real estate demand remains strong in Quebec City and the number of properties on the market has not yet seen a significant increase like elsewhere in the province,” said Michèle Fournier, Vice President, Royal LePage Inter-Québec. “However, we could experience a more severe market downturn if interest rates continue to rise by the end of the year,” she adds.
The impacts of additional Bank of Canada rate hikes are expected to be felt in early 2023, according to Fournier, as the mortgage rate that a buyer could have pre-qualified for in the third quarter will be further reduced by the new year.
“Right now, there’s still a large number of buyers ready to enter the real estate market, and multiple-offer scenarios are still occuring for some properties,” says Fournier. “The slowdown in real estate activity and price stabilization is inevitable, but I expect the Quebec City real estate market to experience moderate price fluctuations,” she concludes.