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Canada’s housing market continues to balance the effects of population growth and declining mortgage rates against a slowing economy, rising geopolitical tensions, and wavering consumer confidence, resulting in a luxury market that remains steady, but reflected limited growth in the third quarter of 2024. According to Sotheby’s International Realty Canada’s Top-Tier Real Estate: Fall 2024 State of Luxury Report, the luxury condominium market in two of Canada’s major urban centres, Toronto and Vancouver, have shifted into buyers’ territory with prices stabilizing as supply outstrips demand. While demand for luxury single family homes has remained resilient, overall market dynamics have evolved to better favour homebuyers in these two key markets, creating advantageous conditions for purchasing luxury homes in cities typically renowned for hyper-competition.
“In recent years, the demand for upward housing mobility across the conventional and luxury housing markets of Canada’s largest cities has risen to all-time highs. However, these aspirations have been out of reach for many Canadians due to skyrocketing housing prices and intense competition for available property inventory. This fall, homebuyers and investors are set to encounter some of the most favourable conditions in years for purchasing or upgrading their homes as top-tier property listings supply increases, interest rates decline, and housing prices stabilize or even decrease in certain communities. This trend is especially evident in the once fiercely competitive markets of Vancouver and Toronto, as well as across the luxury condominium sector,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “Although we expect the luxury market to remain largely stable in the coming months, over the longer term, there is no doubt that population growth will intensify competition for housing. Further, rising building costs and ongoing bureaucratic and policy barriers will only discourage construction. This means that there is an opportunity to take advantage of the favourable homebuying conditions we are seeing today.”
According to Don Kottick, it has taken the better part of a year for Canada’s luxury real estate to absorb the effects of multiple interest rate cuts by the Bank of Canada, as homebuyers in this segment are typically insulated from rate changes as they utilize cash reserves and strong financial positions. However, the cumulative effect of interest rate cuts has permeated market sentiment, instilling confidence and spurring transactions among those who wish to capitalize on elevated inventory levels and variable interest rates, or preparation for strategic real estate transactions in the months ahead. Should additional rate reductions take place before year-end, pre-transactional activity is likely to translate into a substantial boost in sales.
MARKET HIGHLIGHTS
Toronto
In the country’s largest luxury real estate market, the Greater Toronto Area (GTA), overall residential real estate sales over $4 million (condominiums, attached and single family homes) remained consistent year-over-year between July 1–August 31, with a nominal uptick of 3%. Although single family home sales over $4 million saw a modest 4% annual improvement, $4 million-plus condominium sales fell 25% from last summer’s levels. GTA residential sales over $1 million were down 11% year-over-year over the summer months. Preliminary fall activity indicates similar trends ahead, as $4 million-plus residential sales in the GTA saw an annual increase of 9% between September 1–30. During this period, single family home sales over $4 million were up 9% year-over-year, while one condominium sold over $4 million, on par with September 2023. GTA residential sales over $1 million remained in balance with a 2% year-over-year uptick this September.
Vancouver
Sales activity softened across Vancouver’s luxury real estate market in the third quarter, as high housing prices and uncertainty surrounding the upcoming provincial election dampened consumer confidence. From July 1–August 31, luxury residential sales over $4 million fell 13% short of summer 2023 levels, with $4 million-plus single family home sales down 16% year-over-year, while seven $4 million-plus condominiums sold compared to six sold last summer. Overall, residential sales over $1 million were down 15% year-over-year during this time. Uneasy consumer sentiment was reflected in September activity, as residential sales over $4 million fell 52% from September 2023 levels. Single family home sales over $4 million were down 48% year-over-year, and there were no sales of condominiums over $4 million compared to two sales in the previous September. $1 million-plus residential sales saw an annual decline of 31% overall.
Montreal
In contrast, top-tier property sales in Montreal improved through the summer months across all residential housing types, condominiums, attached and single family homes, and sales collectively surged to close the third quarter of 2024 with strong gains across the $1 million-plus market. Although there were five sales over $4 million between July 1–August 31, down from nine properties sold over the previous summer, sales over $1 million were up 15% year-over-year. September sales data reflects a market poised for improved activity, as $1 million-plus residential sales soared 83% year-over-year, while two properties sold over $4 million, compared to three transactions in September 2023.
Calgary
Calgary’s luxury market performance continued to surpass major cities across Canada in the third quarter of 2024, as gains in population from immigration and in-migration boosted demand across all residential housing types. Between July 1–August 31, $1 million-plus sales climbed 31% year-over-year, with one property sold over $4 million, on par with seasonal levels recorded each year between 2021–2023. September luxury sales activity foreshadows an active and healthy market ahead. With $1 million-plus sales up by 15% year-over-year, and with two properties sold over $4 million between September 1–30 compared to a quiet $4 million-plus market in September 2023, Calgary is poised for healthy activity in the months ahead.
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