By ALLISON LAMPERT, The Gazette November 25, 2010 11:42 AM


MONTREAL - Over the past decade, housing prices in Montreal have grown at about the same pace as those in the Vancouver market – and even more quickly than prices in Toronto – a CMHC analyst told a conference Wednesday.

Yet while some economists have raised concerns about a possible housing bubble in the high-priced Vancouver market, analysts are predicting a soft landing next year in Montreal, with a return to a more balanced market.

Citing data from the National Bank House Price Index, Canadian Mortgage and Housing Corp. senior market analyst Bertrand Recher said Montreal prices have risen steadily since 2002, with only a slight dip during the 2009 recession.

That’s a key difference between the Montreal market and the housing markets in Toronto and Vancouver – both of which were hit during the recession, explained National Bank senior economist Marc Pinsonneault.

“There were more fluctuations in the prices in Vancouver,” he said. “You didn’t have that in Montreal.”

It’s partly a question of affordability. The average price of a single family home in Montreal was $418,026 during the third quarter of 2010, compared with more than $660,000 in Vancouver.

“The market here is still not expensive,” Pinsonneault said. “There is less need for this type of correction in Montreal.”

Pinsonneault noted that there was more speculation by investors in the Vancouver market.

“Maybe we’ve had more prudent behaviour here.”

Take condo building, which has soared to near record levels this year in Montreal. Yet about half of the condos built in Montreal are constructed in smaller buildings with up to 19 units, Recher said.

By comparison, the majority of condo starts in Toronto are in buildings with 100 units or more.

Building fewer units allows the developer to minimize risk and be more in line with consumer demand, because he is stuck with fewer condos if they fail to sell.

Pinsonneault also pointed out that prices in Toronto grew far more rapidly than housing prices in the Montreal market during the 1990s.

“Montreal is now playing catch-up.”

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