Canada’s luxury homes market is brushing off the headwinds of changes to housing and mortgage lending policies that have been introduced over the past year.
Most Canadian housing markets are showing rising values at the top end, despite falling sales in the Greater Vancouver and Greater Toronto areas.
An analysis by real estate brokerage Royal Le Page has found that the new mortgage stress test rules; and the taxes on foreign buyers, and BC’s additional property transfer and schools taxes for $3m+ homes; have dented sales.
But prices have held up well.
“Home prices in Canada’s luxury real estate market have remained remarkably resilient when you consider the economic headwinds that serial government interventions have created,” said Phil Soper, president and CEO, Royal LePage. “The resilience of home values reflects the strong aspirations of luxury buyers to reside and work in cities that are consistently ranked among the most desirable on the planet.”
These home types are the best performers
In Greater Vancouver and Greater Toronto, it is the luxury condo market that is showing the largest increase in value; median condo prices gained 7% year-over-year in Greater Vancouver during the first four months of 2018; in the GTA these homes gained 10.4%
Luxury condos also saw gains in the Greater Montreal Area (3.9%) and Ottawa (4.0%) while Calgary posted the only decline (6.1%).
For the detached sector, there were gains for the Greater Montreal Area (9.1%), Ottawa (6.3%) and Greater Vancouver (5.2%). Detached home values in Calgary (0.6%) and the Greater Toronto Area (-0.2%) remained flat.
“Somewhat unusual in historical terms, and reflecting an important demographic shift happening across North America, appreciation in the luxury condominium market is outpacing the traditional target for large value residential property investment, the detached house,” said Soper. “Baby Boomers are finally exiting their large family homes, and luxury condos, with their low maintenance lifestyles, are the favoured destination.
What’s ahead over the next year?
Royal Le Page sees continued growth for luxury real estate theough to spring 2019, with Calgary the laggard.
When broken out by region, the median price of a luxury condominium in the GTA is forecast to post the largest price gain, rising 8.0% to $1,847,194 in the first four months of 2019 when compared to the same period in 2018.
Luxury condos in both Ottawa and the Greater Montreal Area are forecast to increase 3.0% over the next year.
Calgary is the only city surveyed that is expected to see the median price of a luxury condominium dip in spring 2019 when compared to 2018, decreasing 4.0% year-over-year.
For detached luxury homes, Greater Vancouver is forecast to decline in the first four months of 2019 by 3% year-over-year to $5,619,153, while properties in this segment in the GTA are estimated to remain flat (0.0%) over the same period.
The Greater Montreal Area and Ottawa are both forecast to increase 5% year-over-year, and detached luxury homes in Calgary are expected to rise 2% during the same period.