Residential real estate over $1 million will be in high demand in the Toronto and Vancouver markets this fall, outpacing available inventory, according to Sotheby’s International Realty Canada’s 2015 Top-Tier Real Estate Report. The Bank of Canada’s September 2015 ruling to hold the key overnight interest rate at 0.5 per cent will continue to provide a positive effect for luxury real estate sales, increasing consumer borrowing towards homeownership, offsetting affordability and attracting foreign investors.
Sales of properties over $4 million are also gaining momentum in Toronto and Vancouver, reinforcing these cities as international leaders in luxury real estate. Both of these markets are expected to see significant sales gains across all product categories, especially condominiums and attached homes due to limited supply of single family homes, while Montreal is predicted to find its market balanced. Calgary, on the other hand, may see slowing sales and absorption rates.
The report indicated a split in major Canadian real estate markets during the first half of 2015. Sales of condos, attached and detached single family homes over $1 million increased by 56 per cent, 48 per cent and 20 per cent year-over-year in the Greater Toronto Area (GTA), Vancouver and Montreal regions, respectively. Meanwhile, sales in those categories decreased by 36 per cent in Calgary. Further, luxury sales in the $2-to-4-million and $4-million-plus categories increased by 52 and 71 per cent, respectively, in Vancouver, and 46 and 72 per cent, respectively, in the GTA.
Growth in Vancouver and the GTA is speeding up due to limited inventory, historically low interest rates, heightened consumer confidence due to stable national unemployment and increased international demand. This is especially due to volatility in global stock markets and a slowing Chinese economy, resulting in a continued increase of buyers, especially from mainland China.
Following years of record-breaking sales, Calgary’s high-end housing market experienced a drop in the first half of this year due to the city’s reliance on the state of the oil and gas industry, employment rates and net migration. Market performance in September and October will be very important in determining long-term trends for Calgary’s $1-million-plus real-estate market in 2016.
