Luxury home sales in Toronto and Vancouver lost steam in the first half of the year, while Calgary and Montreal’s top-tier markets gained ground.
A 2017 mid-year report from Sotheby’s International Realty Canada says both Toronto and Vancouver saw sales of $1 million-plus homes slow this year, thanks in part to the introduction of regional housing measures meant to cool their respective markets.
In contrast, a new sense of cautious optimism in Calgary and continued momentum in Montreal helped those markets register healthy gains.
“Local market forces such as regional housing supply constraints, local economic performance, and evolving consumer sentiment and demand, remained dominant forces in shaping all four markets,” the report said.
Sotheby’s also says while it doesn’t see a correction in the luxury real estate market on the horizon, rising interest rates could have an impact on higher-end housing.
Greater Toronto led the pack in luxury real estate with sales starting off with a bang in 2017, but the implementation of Ontario’s Fair Housing Plan towards the end of the second quarter saw those sales begin to pull back, according to the report.
Through the first six months of the year, more than 14,000 luxury properties sold, marking double-digit increases across all price categories.
Sales of homes more than $4 million saw the highest year-over-year rise.
“Strong buyer demand remained unmatched by available GTA inventory, resulting in multiple offer scenarios and 70% of home sales over $1 million selling above list price,” Sotheby’s said.
However, sales activity of homes more than $1 million went from an 85 per cent increase in April year-over-year to a decline of 31 per cent in June on a year-over-year basis in the wake of new housing measures.
Sotheby’s expects buyers and sellers to remain in “wait and see” mode for a little while, but says solid economic fundamentals should be enough to sustain demand as 2017 progresses.
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Vancouver’s luxury housing market began to normalize in the first half of 2017 after British Columbia’s tax on foreign buyers.
Sales of top-tier real estate continued to fall, but at a slower pace.
Sotheby’s Canada says sales of homes more than $1 million fell 23 per cent from the same time last year and sales activity in the $4 million-plus market suffered a sharper drop of 52 per cent.
Regardless of sales volume though, unaffordability will continue to be a hallmark of the market.
“As the dust from the flurry of policies implemented in 2016 settles and as market activity calms, affordability remains a monumental challenge for Vancouver as market moves into the third quarter of 2017,” the report said.
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Sales of Calgary luxury homes rose 24 per cent in the first six months of the year, as stability returned to the market.
Sotheby’s says low interest rates, an improving provincial economy and rising consumer confidence helped bolster activity.
Sales were largely confined to attached and detached homes, though, as buyers passed over condos.
Sotheby’s expects the market to stabilize further in the third quarter, but there are still many risks facing the city’s luxury market, including fluctuating oil prices and uncertainty in the business environment.
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Sotheby’s says Montreal’s luxury market exceeded industry expectations, as sales of $1 million-plus homes rose 17 per cent in the first half of 2017 compared to the prior year, led by the city’s red-hot condo market.
The market strength was underscored by local consumer optimism and an uptick in foreign interest from European and Chinese buyers.
However, higher sales activity did not translate into significantly higher prices.
“Montreal’s luxury real estate is expected to continue to offer considerable value to buyers and investors when compared to markets such as Vancouver and Toronto,” Sotheby’s said.
The brokerage expects the city’s top tier market to strengthen in the third quarter because of a healthy local job market and rising consumer confidence.
What you can get for $1 million in Montreal:
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