Toronto Star

Condos, luxury homes to shine in 2018 market

Those able to afford $4M homes less affected by rate, rule changes


High-end real estate has continued to sell and appreciate while the rest of the Toronto-area property market endured a rockier year, says the CEO of Sotheby’s Internatio­nal Realty Canada.

Brad Henderson predicted a less choppy year in the real-estate market overall for 2018.

But, he said, he expects the substantia­l gains made in the super-luxury homes category — properties selling for $4 million and more — to continue in Toronto, particular­ly in the condo sector, with luxury buyers less vulnerable to interest-rate and mortgage-rule changes.

Henderson called it “the year of the condo” across Canada, with strong performanc­e in the country’s major housing markets.

“The condo phenomenon is something that is happening all over North America,” he said.

The company’s 2017 year-end Top Tier Real Estate report, published Wednesday, noted that, “The performanc­e of the GTA’s top-tier condominiu­m market eclipsed that of other major Canadian markets in both sales volume and percentage gains in 2017.

“Sales of $1-million-plus condominiu­ms were up 59 per cent year over year within the region, with luxury sales over $4 million up 91 per cent over the previous year,” it said.

In the city of Toronto, condo sales volumes in the $4-million-plus range rose 82 per cent and those in the $1-million-plus category were up 35 per cent year over year.

“Certainly in Toronto, Vancouver and Montreal, condos are becoming a choice in terms of where people want to live. If you’re a profession­al and want to live close to where you work, living in the downtown region has become a lifestyle choice, not a situation of necessity,” he said.

Condos provide what Henderson called “the accordion advantage” — party rooms that allow residents to host large dinner parties and guest suites that mean occupants don’t need to carry extra bedrooms as part of their home.

“It gives you the ability to accommodat­e your lifestyle, while reducing (your personal space requiremen­ts) if you’re looking for more of a lock-and-leave kind of asset,” he said.

Ontario’s Fair Housing Plan in April ended the frenzy of the first four months of last year in the Toronto-area market. New mortgage stress-testing rules by the Office of the Superinten­dent of Financial Institutio­ns were expected to impact home sales in the first part of this year.

But buyers who can afford to pay $4 million or more for a home are largely immune to those kinds of developmen­ts and to other day-to-day factors such as mortgage stress-testing and rising interest rates, Henderson said.

Sales of $1-million-plus single-family homes in the Toronto area dropped 8 per cent in Toronto and 2 per cent across the region, compared to 2016.

But the number of single-family house sales in the more-than-$4-million category actually increased 34 per cent year over year in the Toronto area and 31 per cent in the city of Toronto, according to the report.

Condos continued to attract investors, with rental vacancies in Toronto and Vancouver at 1 per cent or less.

“The cash-on-cash return isn’t there from a pure return on your investment perspectiv­e, but when you factor in the price appreciati­on, it does become an attractive way to own and invest in residentia­l real estate,” Henderson said.

Whereas high-priced Toronto properties took substantia­lly longer to sell in 2017 compared to 2016, Montreal homes priced over $1 million took less time to sell.

“Montreal has always suffered from a political instabilit­y shadow. But that concern has been pretty quiet over the last three, five or seven years. It has given people more confidence,” he said.

Sales of homes more than $1 million increased 21 per cent year over year in Montreal, “setting the city up for continued strength in 2018,” Sotheby’s said.

 ?? SOTHEBY’S REALTY CANADA ?? Sotheby’s Internatio­nal Realty Canada CEO Brad Henderson declared it “the year of the condo” across Canada.
SOTHEBY’S REALTY CANADA Sotheby’s Internatio­nal Realty Canada CEO Brad Henderson declared it “the year of the condo” across Canada.

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