Montreal’s real estate market continued its strong momentum in July 2025, with home sales increasing by an impressive 9.7% compared to the same month last year. This marks the most active month for home sales in the region since 2021, highlighting a surge in buyer demand despite rising prices and tightening affordability.

What’s Driving the Surge?

The sharp rise in home sales is primarily attributed to increased competition among buyers, particularly in popular neighbourhoods where available listings remain limited. Many prospective homeowners are engaging in bidding wars, often offering more than the asking price to secure properties. This overbidding trend has become a defining feature of the Montreal housing market, pushing prices upward and raising concerns about affordability for first-time buyers.

Supply-side constraints continue to exacerbate this situation. While demand remains strong, the number of new listings has not kept pace, resulting in a competitive market where sellers hold the advantage. Experts note that construction delays and high costs of building materials have slowed new home development, further tightening the housing supply.

Impact on Home Prices

As a result of this dynamic, home prices in Montreal have seen steady increases throughout 2025. The average sale price has risen significantly compared to last year, with certain neighbourhoods experiencing double-digit percentage growth in listing prices. This escalation is pricing some buyers out of their preferred areas, forcing them to consider more affordable locations or smaller properties.

For buyers, the challenge is clear: to secure a home in such a market, preparation is key. Working closely with mortgage professionals to get pre-approved for financing can offer a competitive edge. Sellers often prefer offers from buyers who have mortgage pre-approval, as it reduces the risk of financing issues during the transaction.

What This Means for Mortgage Seekers

Given the rising home prices, mortgage affordability is becoming a pressing concern. Prospective buyers should assess their borrowing capacity carefully, taking into account not just the mortgage payments but also other related expenses like property taxes, maintenance, and insurance.

Mortgage.Expert recommends considering various mortgage products available in the Canadian market, including fixed-rate and variable-rate mortgages. Fixed-rate mortgages provide payment stability amid potential future rate increases, while variable-rate mortgages might offer lower initial rates but come with interest rate risk.

Additionally, government programs aimed at first-time homebuyers, such as the First-Time Home Buyer Incentive or Home Buyers’ Plan (HBP), can help alleviate financial pressure. These initiatives can make homeownership more accessible, but buyers must understand the eligibility criteria and implications before proceeding.

Market Outlook

Analysts predict that Montreal’s housing market will remain active for the foreseeable future, with demand outpacing supply. While gradual easing is possible as more homes come to market, affordability pressures may persist, especially if interest rates rise due to broader economic conditions.

Monitoring market trends and interest rate forecasts will be crucial for buyers planning to enter the market in the coming months. Mortgage.Expert is committed to providing up-to-date information, tools, and expert advice to help buyers navigate this complex environment successfully.