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.