Bill 96 was also cited by one West Island broker as a possible reason why the real estate market is slowing.

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Higher borrowing costs have started to weigh on the housing market, but a major brokerage firm still expects Montreal-area property prices to end the year above where they started.

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Royal LePage on Wednesday reaffirmed its forecast for aggregate property prices in Greater Montreal to end the year 12.5 per cent higher than in the fourth quarter of 2021.

After residential real estate prices rose 13.9 per cent year-over-year to $585,700 in the second quarter, Royal LePage now sees a “slight” softening for the Montreal market in the second half, according to the firm’s quarterly house price survey.

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Policymakers at the Bank of Canada are expected to announce another interest rate hike Wednesday — of up to 75 basis points — in a bid to slow red-hot inflation.

Canada’s central bank boosted rates to 1.5 per cent from one per cent last month and said it was ready to act “more forcefully” if needed. Brokers say the recent rate increases, which have translated into higher mortgage rates, have dented homebuyer appetite over the past few weeks.

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“What we’re hearing from buyers is that there’s a shift in behaviour,” Marc Lefrançois, real estate broker at Royal LePage Tendance in Montreal, said in an interview. “Because borrowing costs have risen significantly, people are having to reassess their financial capacity.”

Meanwhile, sellers “are not adjusting as fast and are still keeping their expectations very high,” Lefrançois added. “So there’s a bit of a disconnect between supply and demand. It’s probably temporary, but it’s there.”

Seasonal factors may also be affecting transactions. For the first time since the start of the pandemic, people are travelling en masse, which may be one of the reasons demand for properties in Greater Montreal slowed down in June, Lefrançois said.

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“It’s clear there’s a seasonal effect at play,” he said. “That wasn’t the case over the last two years, when most people were stuck here.”

Whatever the reason, Montreal-area properties are now taking more time to sell. That’s particularly true for homes that are listed at more than $1 million, where supply has begun to outstrip demand, Royal LePage says.

“The market is becoming more patient,” Lefrançois said. “Under $1 million, it’s still a sellers’ market. Above $1 million, you can’t expect to sell your home in one weekend, but rather in a matter of weeks, if not months. Multiple offers are also becoming less frequent.”

Even so, Lefrançois insists the softening demand isn’t a cause for concern. The strength of the real estate market “had become unsustainable,” he said.

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In the second quarter, the median price of a single-family detached home rose 18.1 per cent year-over-year to $660,400, Royal LePage data show. Condominiums saw their median price advance 11.7 per cent to $452,500. The firm’s price data includes both resale and new construction properties.

Economic factors aren’t the only reasons the real estate market is slowing — political decisions, too, are having an impact.

Sean Broady, a broker with Royal LePage Elite in Beaconsfield, said he has listed two West Island properties in the past few weeks for owners who are looking to leave the province following the passage of Bill 96, the Coalition Avenir Québec government’s controversial reform of language laws.

“The adoption of Bill 96 raised alarm bells with many West Islanders who moved here from outside the province for work or don’t have strong French skills, and are currently considering leaving,” Broady said in a statement.

Lefrançois, who is based in the Town of Mount Royal, doesn’t think the trend will spread.

“It’s probably limited to the West Island, and perhaps parts of downtown,” he said. “Not everyone can afford to leave Quebec like that due to political circumstances and find another job elsewhere quickly. There’s a cost attached to that. You probably need to have a fair bit of wealth to make that decision.”

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