Toronto is experiencing a spike in sales of single-family homes fetching at least $1-million while the Vancouver market slows down, a trend that is forecast to carry over into the fall.
"Vancouver has an incredible amount of wealth, but Toronto is a place where there are more higher-paying jobs," said Brad Henderson, chief executive officer at Sotheby's International Realty Canada.
The Vancouver market appears to be finally going through sticker shock after a three-year rally. The average price of detached properties sold within Vancouver's city limits fell to $2.6-million in August, down 11.6 per cent from July, while the average price within Toronto proper rose 0.3 per cent to $1.21-million, according to data from real estate boards.
Sotheby's did its own analysis and found there were 959 single-family properties that sold for $1-million or higher in July and August in Toronto, up 55.2 per cent from the same period last year. By contrast, sales in that million-dollar category tumbled 44.3 per cent over the past year to 288 houses that traded hands in Vancouver.
The B.C. government introduced a 15-per-cent tax on purchases by foreign buyers in the Vancouver region, effective Aug. 2.
Sales were slowing down in July in Vancouver before the tax took effect, Mr. Henderson said. "It remains to be seen whether demand in Vancouver will go away or if that demand will be realized. The new tax caught the market for the most part by surprise. It stunned the market," he said.
Some industry observers don't expect much of a spillover of foreign buyers, notably from China, into Toronto. But Mr. Henderson said he anticipates some money from abroad that would have gone into Vancouver is bound to land in Toronto.
"Investment by non-Canadians is just going to add to the dynamics already in play in Toronto. It's going to add to an already strong market," he said, citing low interest rates, limited supply and solid demand generally as key factors already driving the housing market in Canada's largest city.
Data released by the B.C. government show foreign buyers accounted for 10 per cent of sales of all housing types in Metro Vancouver during a five-week period from June 10 to July 14.
Toronto and Vancouver remain by far the country's two most expensive places to buy houses.
Mr. Henderson said that while average prices fell in Vancouver from July to August, they remain well above levels from a year earlier. He predicts benchmark prices will climb next year in Toronto while price growth flattens in Vancouver. The benchmark price is a representation of the typical property sold in an area.
In Greater Vancouver, which includes suburbs such as Burnaby and Richmond, the price for detached houses, condos and townhouses sold in August averaged $833,065, down 7.5 per cent from the same month in 2015.
The B.C. government implemented a measure in mid-February that saw buyers of properties pay extra tax on the portion of their purchase above $2-million. That tax on higher-end houses and the new tax on foreign buyers have combined to slow down the top-end market in Vancouver, said Cameron Muir, chief economist at the B.C. Real Estate Association.
Sotheby's didn't examine Greater Vancouver, but its data show boom times in the Greater Toronto Area. There were 3,026 sales of single-family houses in the GTA in July and August, up 82.6 per cent from the same two months in 2015.
In the GTA's luxury segment, there were 47 sales of single-family properties for $4-million or higher in July and August, a 74.1-per-cent increase from a year earlier. In the City of Vancouver in that luxury category, sales decreased 37.9 per cent over the past year to 41 properties that changed hands.