Ontario condo sales have been sluggish lately, but more buyers will likely return to purchasing them once competition heats up again for single-family homes. That’s one prediction from Engel & Völkers’ 2024 Mid-Year Canadian Luxury Real Estate Market Report. The data focuses on $1 million-plus dwellings in Toronto, Vancouver, Ottawa and Halifax, between January and June.
Toronto and Ottawa
In Toronto, the market for homes valued at $1 million and higher showed consistency, especially in the detached market where rising interest rates had little impact. For instance, sale prices in Toronto grew by 4.73% for homes valued at more than $8 million.
On the other hand, condos stayed on the market longer between January and June. Units that weren’t located in prime neighbourhoods remained unsold.
In June, the Toronto Regional Real Estate Board reported that, at the end of May, the Greater Toronto Area had 8,183 apartment units for sale, which is the highest number compared to any month in recent history. High borrowing costs and purchase prices are factors.
The consensus from Engel & Völkers is that condos just aren’t big enough. One and one-plus bedroom units don’t meet the needs of family-focused millennials. Boomers who would normally move into downsizer-friendly condos are currently continuing to age in place because the inventory is either too expensive or not useful for their size needs.
According to the market outlook for Toronto, residential luxury real estate will see a 5 per cent increase by the end of the year, especially with the anticipated rate cut this fall.
“Once buyers begin getting priced out of the residential home market, they will not be able to compete, and consumer demand for condos will return,” Engel & Völkers state. “Investors should note that climbing rental rates will affect Toronto’s market outlook. Renters have a threshold, and many will reach a point where buying makes more sense than continuing to rent.”
Meanwhile, in Ottawa, the forecast calls for a 5 per cent price increase for both condos and residential homes by years-end.
Vancouver
Vancouver also experienced luxury market stability. Engel & Völkers expect a 4% price increase for condos and residential properties worth over $1 million by years-end, with a higher sales volume compared to the second half of 2023.
This year, many sellers had waited until spring to put their homes on the market. In April, there were 3,542 listings priced over $1 million and sales also grew to 1,213.
Buyers continued to have much choice during May. With little competition, many terminated their signed contracts due to issues with condo association documents, unacceptable home inspections and issues misaligned home appraisals and financing issues.
Meanwhile, government-imposed restrictions have pushed away potential investors who typically helped fulfill Vancouver’s rental supply. This shortage is causing rents to increase.
Halifax
Compared to the same period last year, there was a 14% increase in new listings and a 5% increase in sales for units worth over $1 million.
Up until April, homes priced under $700,000 sold fast due to ongoing population growth. Halifax continues to be a seller’s market. Although, sales outside the city core were slow for homes over $1 million. Inventory isn’t as high due to high interest rates and a lack of foreign buyers who search for recreational properties.
“The foreign buyer ban has greatly impacted Halifax’s luxury market, especially condos and HRM waterfront properties,” said Donna Harding, an Engel & Völkers partner in Nova Scotia. “There is a misconception by buyers outside of Canada that it applies to the entire country rather than Census Metropolitan areas and Census Agglomerations.”
Engel & Völkers foresees a 6% price increase by the end of 2024 for this market.
