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For as long as most of us can remember, Montreal has been the city the real-estate cycle forgot.

Ever since the first stirrings of separatism spurred a westward exodus of anglophones and made Montreal a permanent buyer's market, house hunters in Canada's second-biggest city have been able to snag a château at prices that would make Torontonians and Vancouverites gag with envy.

From a sprawling West Island bungalow on a tree-lined street to a century-old triplex in the city centre, the average Montreal family could realize the dream of homeownership without becoming house poor. But this severe housing affordability has also made Montreal real estate a relatively mediocre investment.

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The psychological upside to this financial downside is that Montrealers have been largely immune from the obsessive-compulsive disorder that has inflicted house hunters in Toronto and Vancouver. You can still make it through a Montreal dinner party without people talking about real estate. In Vancouver and Toronto, everybody, it seems, is a player, frantically plotting to buy, sell or flip their next house or condo. This fixation on property looks downright unhealthy to a Montrealer, who would much rather talk about what really matters in life, like the Habs.

Alas, there are signs that Montreal could soon be facing the same frenzy that has made Toronto and Vancouver among the most talked-about property markets in the world. Foreign-buyer taxes in Vancouver and Toronto have made investors turn their attention to Montreal. That has contributed to a now-or-never mentality as prospective homebuyers feel pressured to make the leap while they can. The prospect of tighter mortgage eligibility rules and rising interest rates are adding to that pressure.

Canada Mortgage Housing Corporation reported this month that the share of non-resident ownership of condos in downtown Montreal and nearby Nuns' Island surged to 7.6 per cent this year from 4.3 per cent in 2016. This contributed to an overall increase in the proportion of Greater Montreal condos owned by foreigners to 1.7 per cent from 1.1 per cent a year ago. While that's still lower than the share in Vancouver or Toronto – 2.2 per cent and 2.5 per cent, respectively – foreign ownership has been increasing faster in Montreal.

The Journal de Montréal reported last year that Chinese investors had accounted for as much 80 per cent of presales in some high-profile downtown condo projects. About a quarter of the units in the two recent condo towers that bear the iconic Montreal Canadiens logo were purchased by Chinese investors. A third 55-storey Canadiens tower is now slated for 2021. Asian investors made up 40 per cent of the units in the first-phase of the YUL project, built by China's Tianco Group and local developer Brivia Group. A second 38-storey YUL tower is now in the works.

Year-over-year Montreal condo sales surged by 23 per cent in November to a record 1,137 units. Single-family home sales jumped 8 per cent, pushing overall residential property sales to 3,348 transactions. Median prices rose more modestly – 3 per cent for condos and 5 per cent for single-family dwellings. But the Greater Montreal Real Estate Board says the oversupply of condos built in the previous two years has been completely absorbed, suggesting prices could rise sharply in 2018.

This shift in psychology is suddenly making Montreal a seller's market. Multiple bids are increasingly common and properties are selling for above asking for the first time in decades.

Whether this shift is driven by foreign buyers or whether investors are just reacting opportunistically to Montrealers' new-found real-estate optimism is moot. Montreal is joining the Canadian property party just as the punch seems to be running out in other cities.

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"There's probably significant money to make in Montreal real estate right now. Locals should remember, however, that sophisticated money doesn't chase less sophisticated money. It's the other way around," warns Stephen Punwasi, co-founder of Better Dwelling, a Vancouver-based real-estate news site. "Speculators, both foreign and domestic, tend to appear when locals become overly optimistic about markets."

Montreal's property market, then, could fast become the country's riskiest. Steady population growth and immigration provide a floor for prices in Toronto and Vancouver. Montreal's demographics are on shakier ground. And while the local economy is on a bit of a roll and the city's aged housing stock is badly in need of renewal, investors can head for the door at any moment.

"Remember, speculators don't appear to buy trophies to keep forever," Mr. Punwasi said in an e-mail exchange. "They are there to apply additional pressure to prices, and liquidate holdings as the pressure releases."

So, guess what Montreal dinner-party conversations will be about in 2018?

Statistic Canada released data showing that foreign ownership in Toronto and Vancouver are less than five per cent.
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