How high-rise condos disrupt Montreal market

By Kay Rivera

The Canada Mortgage and Housing Corporation (CMHC) reported that the downtown Montreal housing market will most likely be affected by the increasing number of high-rise condominium buildings.

CMHC found that the construction of very large high-rise condominium apartment buildings is becoming a trend, and more of this property type are being built or expected to rise in the next few quarters. Hence, it is essential to have a closer look at the unit sales and rentals in these buildings.

The latest Housing Market Insight for Montreal showed that investors account for more than half (57%) in the very large high-rise condominium apartment buildings in downtown. This was higher than the proportion in the other condominium buildings in the same area (about 30%).

Further, the proportion of condominiums that were resold within one year was 7.2% in the very large downtown high-rise buildings. This was again greater than the proportion in the other condominium buildings in the same area (only 1.8%).

Notably, the percentage of sales resulting in a loss was slightly greater in these very large high-rises (about 15%). In the other condominium buildings in downtown Montreal, it was only 5%.

Finally, it was observed that select investors bought a condominium in one of these downtown high-rises in order to rent it out, and remarkably, the operating expenses (mortgage payments, condominium fees and taxes) were higher than the rent collected.

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