First time buyers were not the only ones to buckle under the pressure of rising interest rates and taxation – according to a new report by Sotheby’s International Realty, Canada’s luxury real estate market also took a hammering in 2018. “Across the country, markets continued to face headwinds of rising interest rates and tightened mortgage guidelines.”
TL;DR: Luxury ($1M+) sales are falling across Canada except in Montreal, where the high-tier property market is recording surprisingly strong gains.
In the GTA, sales of residential properties over $1 million recorded a 31% decline compared to 2017, and sales over $4 million dropped by 40%.
GTA’s top-tier homes performed slightly better when looked at on a quarterly basis – in the second half of 2018 some traction was gained gained and $1 million + homes increased by 4% year over year. Sales over $4 million were still down by 20%.
Vancouver and Calgary’s top-tier real estate markets retreated further into buyers’ market territory, as excess supply surpassed consumer demand.
Vancouver City’s top-tier condominium and attached home markets, which had remained robust in 2016 and 2017, succumbed to market stressors as 2018 progressed. The top-tier condo market continued to perform better than the attached and single family home markets, but condo sales over $1 million still decelerated by 14% in 2018 to 1,107 units. Consumer demand has curtailed by a chronic undersupply of top-tier attached homes, which limited sales volume in 2018. Sales of $1 million-plus attached homes fell by 22% to 539 homes. Luxury attached home sales over $4 million decreased from eight units sold in 2017 to four units sold in 2018.
On the other hand Montreal’s luxury real estate market posted new records. The City of Montreal’s top-tier real estate market is still on an upswing, with sales exceeding the records set in 2017. Residential sales over $1 million increased by 20% between 2017 and 2018. $4 million-plus luxury sales dropped from12 properties sold in 2017 to 11 units sold over in 2018.
“Montreal boasted the fastest growing metropolitan economy in 2018, with a growth rate of 2.9%. Job creation, income growth and population gains bolstered demand across the conventional and high-end real estate market, while investment in public infrastructure and urban development projects increased real estate values in key communities across the region. As a result, while the city firmed its position as a global luxury real estate destination in 2018, top-tier sales in Montreal remained predominantly driven by local residents in search of housing rather than investor, speculator or foreign demand.”
In 2017, a 49% surge in $1+ million condominium sales set a new record. In 2018 this record was broken again with an additional 29% gain.
Montreal saw a significant surge in consumer demand in 2018, as sales over $1 million increased 40% over 2017 levels to 290 properties sold. Following moderate year-over-year sales gains of 21% in 2017 over 2016, Montreal’s top-tier single family home market calmed to healthy levels in 2018 as sales over $1 million increased 8% from 2017 to 436 homes sold.
Although Montreal’s prolonged surge in top-tier real estate activity is thought to now be plateauing, the city’s healthy economic fundamentals and growing population are expected to drive active, healthy market demand well into 2019.
This article, How Did Canada’s Luxury Real Estate Market Perform in 2018?, appeared first on Shupilov News.