Toronto will lead the country in million dollar home sales this spring, Vancouver will experience positive gains, Montreal will “maintain balance,” and high-end real estate deals in Calgary will be tempered under uncertain economic conditions. That’s the spring forecast for Canada’s four largest luxury home markets from Sotheby’s International Realty.
“Historically low lending rates will be the driving force behind top-tier real estate sales across the country into mid-2015,” said Sotheby’s CEO Ross McCredie in a release. “With both the Ontario and BC economy positioned for growth, the high-end real estate market in Toronto and Vancouver will experience the greatest gains.”
The Bank of Canada’s decision to cut the key overnight interest rate to 0.75 per cent in January along with the recent decision to hold rates into the spring “will have a positive and stabilizing impact on sales over $1 million,” the luxury realtor said in its report.
For both the luxury condo and single-family home markets the story is virtually the same: positive growth for Toronto and Vancouver, modest growth or “balanced” demand in Montreal, and a slowdown in Calgary as Alberta’s economy is temporarily shaken by falling oil prices.
For more on each city’s high-end housing market we turn to…
Regional highlights from the report
Greater Toronto Area
The luxury housing market started 2015 on a strong note, with $1 million-plus home sales in January and February hitting 997 units, up 26 per cent over the same period in 2014. A strong provincial economic forecast, expected gains in immigration and inter-provincial migration, strengthening consumer confidence and a continued shortage of home inventory over $1 million are expected to fuel a sellers’ market. The luxury single-family home market performed particularly well in January and February 2015 with a 31 per cent increase in sales compared to the first two months last year. Sotheby’s says this is expected to have a positive, trickle-down effect on the luxury townhome and condo markets as buyers seek alternatives.
A positive provincial economic outlook, projected surge in net migration into the Vancouver area and continued foreign investment sustains demand for housing in the city, Sotheby’s says. Within the first two months of 2015, total home sales over $1 million were nearly on par with sales over the same period in 2014, as Vancouver’s conventional and luxury markets showed signs of increased activity leading into March. Single-family homes sales of over $1 million saw a 24 per cent increase in 2014 over 2013 and further gains are expected in the coming months. Meanwhile, demand for luxury townhomes and condos is projected to continue trending upwards as consumers seek alternatives to single-family homes.
Recent economic uncertainty will result in increased inventory and a slowing of million dollar home sales in Calgary. But this, says Sotheby’s, will create an opportunity for buyers, particularly those looking to purchase luxury real estate or to enter the conventional market for the first time. While any long term impact of Calgary’s changing economy on top-tier real estate is still to be determined, historically low lending rates, residential vacancy rates that are expected to rise slightly but remain tight, and an unemployment rate that remains lower than that of other major Canadian cities, will help to reinforce the high-end market in the short-term.
Balance is anticipated for Montreal’s high-end real estate market in spring 2015 as consumer demand and supply of available inventory over $1 million stabilize. With marginal price increases expected for $1 million-plus properties, particularly when compared to the conventional market, healthy sales volume is anticipated with the majority of top-tier home sales projected in the $1 to $2 million single-family market. The lower Canadian dollar will also have a positive impact in the Montreal market by attracting additional foreign interest.