Luxury market shatters records
CHANGING NEEDS AND PRIORITIES CONTRIBUTED TO ‘THE COVID SHUFFLE’
The country’s luxury real estate market continues to shatter records, especially in the Greater Toronto Area, which has “eclipsed the superlative performance” of other hot markets — including Vancouver — in the first half of 2021.
“The pandemic era reinforced the importance of home and space to a degree that has never been experienced,” says Don Kottick, president and CEO of Sotheby’s International Realty Canada.
“We expect this to have a lasting impact across many facets of the Canadian luxury real estate market.”
In its 2021 Mid-year Canadian Luxury Real Estate Market Report, fellow luxury real estate firm Engel & Völkers dubbed the unprecedented levels of growth throughout the first half of the year “the COVID shuffle,” and credits factors that included changing homeowner priorities, low-interest rates, easy access to borrowing and extra savings among professionals who stayed employed in 2020.
Data compiled by Sotheby’s reveals triple-digit growth in major cities across Canada in terms of the number of luxury homes and condos that switched hands in the first half of 2021 compared to the first half of 2020.
In the GTA, sales of condominiums, attached and single-family homes priced at more than $4 million soared 276 per cent yearover-year to 414 properties sold in the first half of 2021. Of those, 15 properties sold for more than $10 million — that’s up from seven properties that fetched above that benchmark in the first half of 2020.
Meanwhile, sales of properties priced between $2 million and $4 million and $1 million and $2 million sales experienced 236 per cent and 213 per cent gains to 3,900 and 25,080 properties respectively. Sales of properties at more than $1 million were up 217 per cent in the first half of the year at 29,394 transactions, with 67 per cent of those selling above list price.
In Vancouver, the tempo of sales “accelerated to a frenetic pace,” as residential properties priced at more than $4 million and $10 million surged 152 per cent and 300 per cent respectively.
Calgary’s luxury real estate activity renewed thanks to gains in oil and gas prices and broader vaccine coverage. The $1 million-plus market rose 236 per cent.
In Montreal, sales of residential properties priced at more than $4 million rose 133 per cent, recapturing pre-pandemic momentum that solidified its position as a global luxury real estate destination.
MARKET REBOUNDED
Luxury home sales plunged with the onset of the COVID-19 pandemic, but the market quickly rebounded thanks to record-low interest rates, a desire for larger properties and more space, and a chronic undersupply of houses — the same factors that fuelled record-breaking sales in other parts of the housing market.
“The new reality is that as the perceived value of living space has increased, affluent buyers’ willingness to pay for luxury real estate has increased exponentially,”
Kottick says. “Affluent consumers are more prepared to invest in additional space and in next-level architecture and design, whether through upsizing, home renovations or home building. This is elevating the quality and pricing of housing in Canada’s most prestigious neighbourhoods, in many cases, permanently.”
Demand for luxury single-family homes overshadowed demand for condominiums in late 2020 but it didn’t take long before affluent homebuyers once again set their eyes on the
sky. Bidding wars and price gains became commonplace. At the same time, demand for low- and mid-rise boutique luxury condominium residences has “flourished” among local homebuyers, Sotheby’s reports.
FOREIGN BUYERS RETURNING
Growing confidence in Canada’s economic recovery, anticipated reopening of provincial and national borders to travel and immigration, as well as continued access to low-cost borrowing and cash savings, will continue to drive luxury sales into
the latter half of the year, Sotheby’s predicts.
Steven Green, a sales representative with Royal Lepage Partners Realty, says many affluent homeowners already had a cottage and purchased a third property amid the pandemic because they were unable to travel and wanted a lifestyle change.
“They might want a hobby or resort-type property about an hour outside the city in addition to a lakefront property that’s further north,” he says.
“Some have been cashing out of their luxury Toronto
properties at top dollar and buying a great lifestyle for less in places like Kelowna, Burnaby and Victoria or Quebec,” Green says. With borders beginning to reopen, he predicts foreign buyers will “return with a vengeance” and further push the luxury real estate market. “I think the market will either stabilize or rise. It won’t go down because there’s no supply.”