Toronto’s luxury home market roared back to life over the summer, with sales climbing sharply in July and August, while Vancouver saw the opposite trend as high-end home sales dropped.
A report on luxury sales by Sotheby’s International Realty Canada shows the number of homes selling for more than $4-million climbed by 34 per cent in the Greater Toronto Area in July and August combined compared with the same period last year while sales more than $1-million climbed by 19 per cent. Luxury sales were particularly strong in the city of Toronto proper, where 35 homes sold for more than $4-million this summer, up 52 per cent compared with the same period last year.
Brad Henderson, chief executive officer of Sotheby’s Canada, said GTA sales are coming off of a weak base in the summer of 2017, which makes the 2018 market seem especially strong. But he said luxury sales have been picking up since April as the broader housing market has strengthened, both within the 416 area code in central Toronto and more recently in the suburban 905 region surrounding the city.
Although sales of GTA homes worth more than $1-million were down 25 per cent in the first half of September compared with the same two-week period last year, Mr. Henderson said it is a short time period to draw conclusions from, and he anticipates a strong luxury market through the fall.
Vancouver’s luxury market has been far weaker this year, in line with a broad-based decline in housing sales. Sales of homes worth more than $4-million fell by 33 per cent in July and August compared with last summer, Sotheby’s reported, while sales of homes worth more than $1-million fell by 24 per cent.
Mr. Henderson said the B.C. government’s increase to the foreign-buyers tax earlier this year, coupled with higher property taxes on homes of more than $3-million and a new property tax aimed at out-of-province buyers in some regions, have reduced the number of foreign buyers shopping for houses in Vancouver, which has a particular impact on the luxury segment of the market.
But he said foreign buyers alone do not explain most of the decline, and a bigger issue is the weak interest from domestic buyers and an unwillingness by sellers to lower their prices to the current market level.
“When you have buyers thinking prices are going down and sellers still believe the value is there, you get the equivalent of gridlock,” he said.
Mr. Henderson said there was almost one year’s worth of inventory of homes worth more $1-million listed for sale in Vancouver based on the ratio of listings in August to the volume of monthly sales. For homes worth more than $4-million and listed for sale on the multiple listing service, there was 20 months of inventory in August for luxury condos, and 31 months of inventory for detached houses in Vancouver.
“Definitely the pendulum has swung over to the buyer’s side of things,” Mr. Henderson said.
Montreal has become one of Canada’s hottest high-end markets, with luxury sales of homes priced more than $1-million climbing 19 per cent in July and August compared with last summer, Sotheby’s reported. The strong summer came on top of robust luxury sales in the first six months of 2018, which climbed by 24 per cent over the first half of 2017.
Mr. Henderson said Montreal is on track to set a record this year for the volume of homes sold over the $1-million mark.
Most of the Montreal’s luxury properties have traditionally been detached houses, but the city’s luxury condominium market has been growing quickly, and 27 condos priced at more than $1-million sold in July and August, up 93 per cent over last year.
The Greater Toronto Area also saw growth in luxury condo sales, Sotheby’s said. Sales of condos priced more than $1-million climbed 28 per cent in July and August compared with last summer.