The Bank of Canada’s Policy Shifts: Key Investment Opportunities for Non-Residents in Québec and Montreal
On October 23, 2024, the Bank of Canada announced a 50-basis-point rate cut, lowering its key interest rate to 3.75%. This move aims to revitalize a slowing economy while offering unique opportunities for foreign investors in the Québec real estate market. At Profusion Immobilier, we specialize in helping international investors navigate these changes and identify the best opportunities in a dynamic real estate landscape, especially in cities like Montreal.
Managing Inflation: A Positive Outlook for Real Estate
Since mid-2022, Canada has faced significant inflationary pressure, peaking at 8.1% in June 2022. However, the Bank of Canada’s aggressive policy, marked by rate hikes, successfully brought inflation down to 1.6% as of September 2024. This control of inflation has paved the way for several rate cuts, including the 50-basis-point reduction announced in October 2024.
Rate Cuts: A Direct Boost to the Real Estate Market
The central bank’s key rate, which fell from 5% to 4.25% earlier in 2024, has now been further reduced to 3.75%. This drop in borrowing costs is directly impacting the real estate market, where financing conditions have become more favorable for both domestic and international buyers. Profusion Immobilier is witnessing increased demand, particularly in the luxury segment, where buyers are drawn to the opportunity to secure loans at more attractive rates.
Fixed mortgage rates have dropped faster than variable rates, fueling demand and pushing property prices higher. In Montreal, the median price of single-family homes rose by 6% in 2024 to $590,000, while condominiums saw a 4% increase to a median price of $410,000. Plex properties have also experienced a 6% rise, reaching a median price of $771,000.
Opportunities for Non-Residents: Exceptions to the Moratorium
Since January 2023, the federal moratorium has restricted foreign nationals from purchasing certain properties in Canada. However, several exceptions remain, offering non-residents opportunities in specific sectors:
- Rural and Semi-Urban Properties: Non-Canadians can purchase properties outside metropolitan areas, providing unique opportunities in regions like the Laurentians and Eastern Townships.
- Real Estate Development Projects: Foreign developers are still eligible to invest in development projects, a popular strategy for those looking to build new properties.
- Purchases by International Students: Foreign students enrolled in full-time studies at Canadian institutions are allowed to purchase residential properties for the duration of their studies.
- Undeveloped Land: Non-residents can also acquire undeveloped land zoned for residential or mixed-use purposes, opening the door for custom-built projects.
Impact of Rate Cuts on the Luxury Market
Sales of properties valued over $1 million have seen a notable uptick in 2024, reflecting increased interest from high-net-worth investors. This segment, often more resilient to economic fluctuations, is thriving under the current favorable financing conditions, particularly thanks to recent interest rate cuts. Moreover, the strong performance of the stock market, particularly the S&P/TSX, has further fueled demand as investors reinvest their gains in tangible assets like luxury real estate. In prestigious areas such as Westmount, Outremont, and downtown Montreal, demand for high-end properties continues to grow, driven by those seeking both security and long-term value.
A Seller’s Market
Despite a 17% increase in property listings compared to 2023, the average time to sell current inventory still favors sellers. With an average of 5.2 months, across all categories, competition remains fierce, particularly for luxury properties.
Stock Market and Real Estate: A Symbiotic Relationship
The stock market and real estate market are often closely linked, with investors adjusting their strategies based on economic conditions and financial performance. In 2024, the S&P/TSX has shown strong recovery with notable gains, boosting investor confidence. As stock market gains increase, many investors reinvest their surplus capital into real estate to diversify their portfolios.
Conclusion
With the interest rate cut announced on October 23, 2024, combined with controlled inflation, Québec’s real estate market presents a prime opportunity for foreign investors. Profusion Immobilier, the exclusive Forbes Global Properties member for Québec, is prepared to assist these investors with tailored solutions that meet the market’s unique demands.
At Profusion Immobilier, we help you identify and maximize your investment opportunities in the Canadian real estate market. Contact us today to discuss your investment plans.
The information in this article is for informational purposes only and should not be construed as legal or professional advice.