Is Montreal's cost of living comparable to that of New York City?
In the heart of Canada, Montreal stands out as one of the best places to live, yet the city's housing market presents a complex picture of affordability.
The Bank of Canada's stimulation measures, intended to revive the economy after the 2008-2009 financial crisis, have been criticised for being too robust. This stimulation has contributed to an unprecedented surge in housing prices across the country, with Montreal not escaping this trend.
A study by the Donner Canadian Foundation reveals that Montreal ranks seventh in North America when considering the price of housing relative to median income, trailing behind cities like New York. In the first quarter of 2025, the monthly mortgage payment required to acquire a median-priced home in Vancouver corresponded to 92.9% of the median income, while in Toronto it was 77.8% and in Montreal 43.4%.
Despite these figures, Montreal's housing market is considered more favourable than in many other parts of the country. The city's population growth is strong, and housing starts have remained stable. Moreover, the increased construction, including the conversion of industrial and commercial land to residential use, has made it easier for housing prices to rise.
However, the affordability problem in Canada and the growth in prices that is disproportionate to incomes is a matter of concern. Hanif Bayat, a renowned urban planner, suggests that overly strict zoning regulations and administrative burden imposed by cities on developers have limited the residential supply and driven up prices, particularly in California, Ontario, and British Columbia.
On the other hand, Amine Ouazad notes that Montreal is more dynamic in construction than Toronto and Vancouver. This dynamism could potentially address the affordability issue to some extent.
The affordability of properties in Montreal is measured using a ratio that divides the reference price of properties by the median household income. With an affordability ratio of 7.2, Montreal is more affordable compared to cities like Vancouver and Toronto, where the ratios are significantly higher.
Desjardins' Affordability Index also paints a similar picture. Only Ontario and British Columbia had indices below 100, indicating that the average household income after taxes is not sufficient to obtain a mortgage to buy an average-priced property.
The high housing prices in Canada have led to an obsession with real estate, with bricks and mortar attracting a lot of investment. This focus on real estate comes at the expense of innovative sectors like technology that generate high salaries.
In conclusion, while Montreal's housing market is one of the most expensive in North America when considering household income, there are signs of dynamism in construction that could potentially address the affordability issue. However, a comprehensive solution would require a balanced approach, addressing both the supply and demand sides of the housing market.
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