Taxes a ‘Negligible’ Factor in Montreal Housing Market Slow-Down

Higher interest rates and the threat of a possible recession seriously hampered buying activity in the Montreal housing market over the past year, but housing taxes –in the form of a welcome tax and property tax – proved to be a negligible part of the equation in 2023, according to RE/MAX Canada’s 2024 Tax Report.

The sentiment is largely due to Montreal’s affordable housing market, where average price at year-end 2023 ($574,845) remains well below other large Canadian markets such as Toronto and Vancouver. Buyers can expect to pay a welcome tax of close to $8,000, payable upon closing, based on the 2023 year-end average. First-time buyers, defined as those who have never owned a home, are not eligible for a rebate but can receive the Quebec Home Buyers Tax Credit on their tax return.

Set by the city, property tax rates currently run at approximately 0.63000 per cent, adding another $3,183 to the annual cost of ownership, based on the average price in the Montreal housing market. A recent update to property assessments have made headlines in Quebec as the province moves to bring assessments in line with today’s housing values. The new assessments have, however, caused confusion in the market, particularly given that some homes have been assessed above recent sale prices.

After a dismal 2023, renewed momentum is expected to characterize home-buying activity in Montreal in 2024. Properties appear to be moving at a faster pace than year-ago levels while showings and open houses are growing busier. First-time buyers are cautiously optimistic, entering the market at price points ranging between $450,000 and $750,000. While condominiums are the first step to home ownership at lower price points in the city, first-time buyers willing to move farther afield may find small, detached homes priced around $750,000. The trade-up market has been impacted by an abundance of offers conditional on the sale of the buyers’ home within 30 days in recent months. Many of these offers are falling through as buyers fail to sell their homes and new buyers lie waiting in the wings. As a result, existing homeowners are choosing to sit tight, hesitant to sell first for fear that they won’t find another suitable home. Yet, they are also hesitant to buy first and go through the motions, only for the deal to die after 30-days. As a result, some buyers will choose to renovate their property, instead of embarking on a move.

The promise of lower interest rates down the road is bringing some comfort to buyers and sellers. Once rates start to decline, which could potentially happen as early as April, home buying activity is expected to gain traction. The market at present, however, remains tenuous, with any unexpected development having the potential to disrupt the whole market.

Methodology for Land Transfer Tax in Montreal Housing Market

0.5 per cent on the first $58,000
1.0 per cent between $58,900 and $294,600
1.5 per cent between $294,600 to $552,300
2.0 per cent between $552,300 to $1,104,700
2.5 per cent between $1,104,700 to $2,136,500
3.5 per cent between $2,136,500 to $3,113,000
4.0 per cent on homes priced over $4,113,000

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*Leger online survey of 1,517 Canadians aged 18+ was completed between July 21 and 23, 2023, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20. 

**This report includes data and insights about Canadian housing markets supplied by RE/MAX brokerages and sourced from the Canadian Real Estate Association and local real estate boards. RE/MAX brokers and agents are surveyed on market activity and local developments. Each RE/MAX office is independently owned and operated.

About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC, RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.

RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children’s Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.

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