Montreal is expected to be a “luxury real estate hot spot” this fall after an elevated summer, while both the Greater Toronto Area (GTA) and Vancouver should regain momentum following a pullback in high-end sales activity, says Sotheby’s International Realty Canada.
On Tuesday, the luxury real estate brokerage published its 2017 Fall Market Forecast, which predicts that top-tier real estate ($1 million-plus) will improve in the fall in Canada’s largest metros: Greater Toronto Area (GTA), Vancouver, Calgary and Montreal.
But Montreal is expected to steal the show in the coming months after seeing an “exceptionally heated” summer market.
“What we saw in the summer was a significant pull ahead in the Montreal market relative to its past performance,” Brad Henderson, Sotheby’s International Realty Canada’s President and CEO tells BuzzBuzzNews.
“But it stood out all the more because the Toronto market had retrenched a bit in terms of its activity relative to the early part of the year, and also because Vancouver is still recovering from the concerns that people had with respect to the foreign-buyer tax that was introduced last year,” he adds.
In July and August, 115 properties priced at over $1 million sold in Montreal, a 60 per cent increase over the same months in 2016. Condos, attached homes and single-family homes are included in Sotheby’s report.
Henderson says activity surged in Montreal’s luxury market thanks to low unemployment and a healthy economy boosting local consumer confidence.
With the economy expected to improve further, Sotheby’s predicts the top-tier market will accelerate throughout the remainder of 2017.
In the GTA, luxury real estate sales over $1 million soared 41 per cent year-over-year in the first six months of the year, despite the Ontario Fair Housing Plan introduced in April.
The legislation for the Greater Golden Horseshoe, which includes Toronto consisted of a foreign-buyer tax, similar to the levy introduced in Vancouver a year ago, in an effort to cool the market.
In July and August, top-tier real estate activity slumped in the GTA with sales over $1 million dropping 39 per cent year-over-year to 1,926 properties sold. Meanwhile, luxury sales over $4 million fell 29 per cent to 35 units sold compared to a year ago.
Going forward, Henderson says high-end activity in the GTA is expected to moderate to healthier levels with the help of a strong economy, but it will take time to strengthen consumer confidence.
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“We believe that the Toronto market place is going through a very similar reflection period that Vancouver went through. We think that the Toronto market will go through it faster because the [foreign-buyer] tax was expected and they understand from the case study of Vancouver that it isn’t going to necessarily collapse the market,” says Henderson.
Vancouver’s luxury market saw a slight upswing in sales in the summer months compared to its slowdown seen in the first six months of the year.
A total of 598 properties over $1 million sold in Vancouver in July and August, up 5 per cent compared to a year ago. However, high-end sales over $4 million fell 21 per cent to 46 units sold.
According to Sotheby’s, Vancouver’s gains in the summer were driven by condo sales over $1 million.
In spite of Metro Vancouver’s foreign-buyer tax, Vancouver’s strong economy has restored local consumer confidence in top-tier real estate, says Henderson.
“We expect to see that activity will increase over the coming months and that there will likely be upward pressure on price,” he says.
Calgary’s luxury market remained stable this summer compared to a year ago.
In July and August, a total of 112 properties over $1 million changed hands in the city, in line with the 111 properties sold last summer.
As Alberta recovers from its recession, activity in Calgary’s high-end market in the fall will be dependent on various factors, including unemployment rates, rental vacancy rates and population growth.
Overall, Canada’s luxury real estate is forecast to improve in the fall thanks to a booming economy and emerging consumer confidence.
“I think we’ll see continued activity in all of the markets but particularly in Toronto, Vancouver and Montreal. As more demand continues to be in the marketplaces, it’s going to continue to want more product and it is going to continue to put upward pressure on price,” says Henderson.