Luxury sales dip in most formerly hot markets

Luxury home sales fell in the two formerly hot housing markets of Vancouver and Toronto, as well as Calgary, in the first couple months of the new year, according to data released Wednesday by Sotheby’s International Realty Canada.

That downward trend, however, stopped at Montreal, a new real estate darling that’s likely to set new records this year.

“All markets in Canada have faced the same headwinds from interest rates and stress testing,” said CEO Brad Henderson, citing the new stress test, which requires borrowers to prove that they can service their uninsured mortgage if lending rates rise above a certain threshold, that came into effect January 2018.

However, Vancouver and other parts of British Columbia have faced additional policy measures, he said, listing off a five per cent hike in the foreign buyers’ tax, as well as a speculation and vacancy tax, and an additional school tax on properties valued at more than $3 million.

Real estate figures have shown a downward trend in prices and sales activity in Vancouver recently that many have attributed to the new measures.

In January and February, 279 properties sold with a price tag of over $1 million, according to Sotheby’s data. That’s down 52 per cent compared to the same two months in 2018 when 576 such properties sold.

Vancouver’s “previously resilient condo market” ex- perienced the greatest decline in sales activity of properties over $1 million with 86 units sold — down 66 per cent from 254 units sold in January and February 2018.

The city continues to be entrenched in a buyer’s market, the real estate brand said.

The Toronto market, he said, seems to have adjusted to new interest rates and tax measures that include it.

The market there is reacting in a more normal fashion, he said, though he noted the city’s severe winter likely kept many potential househunters away from open houses.

In the Greater Toronto Area, luxury sales dipped two per cent year-over-year to 1,497 units sold. Sales of properties with a price tag of more than $4 million dropped the most — 38 per cent to 20 units sold — partly due to a lack of supply and partly because privacy-conscious homeowners shifted to exclusive and off-market transactions in light of a recent ruling permitting broader real estate sales data disclosures.