Toronto and Vancouver both have 15 per cent foreign-homebuyer taxes but it appears the levies are impacting the markets’ luxury single-family home activity differently.
From January to July 2017, $1 million-plus detached home sales soared 25 per cent year-over-year in the Greater Toronto Area (GTA), according to the latest luxury sales data from RE/MAX, published on Wednesday.
But during the same period, $1 million-plus single-family home sales in the City of Vancouver saw a 32 per cent annual decline.
“Historically, Vancouver fluctuates more than the GTA. The market has seen a lot more peaks and valleys than Toronto,” Christopher Alexander, RE/MAX INTEGRA’s Ontario-Atlantic Canada Director tells BuzzBuzzNews.
In the report, the real estate organization outlines the amount of luxury sales, which range from $1 million to $3 million-plus, in major Canadian markets during the first seven months of 2017.
The GTA’s luxury condo segment also saw a substantial annual gain this year. From January to July, $1 million-plus condo sales soared 85 per cent year-over-year.
This spike in luxury sales occurred despite the implementation of a 15 per cent non-resident speculation tax for the Greater Golden Horseshoe region (which includes Toronto) — one of the 16 measures laid out in the Ontario government’s Fair Housing Plan introduced in April.
Even though it’s too early to determine the levy’s full impact, RE/MAX notes the tax did not dramatically curb activity in the GTA’s luxury market during the first seven months of the year.
Instead, RE/MAX says the gain observed in GTA luxury sales can be partly attributed to prices soaring in the overall market, causing more condos to enter the higher dollar threshold and low condo inventory levels.
“The Baby Boomers are finally starting to downsize and developers are not building very large units. So the ones that are large face a lot of competition which drove prices up,” says Alexander.
Detached homes over $3 million in the GTA saw the largest gain in activity as sales climbed by 55 per cent year-over-year from January to July.
In the report, RE/MAX highlighted the Town of Oakville, a suburb in the GTA, because of the substantial increase in sales observed in its luxury market this year. For the first seven months of the year, home sales between $2.5 million and $3 million increased by 112 per cent year-over-year. Oakville is seeing a surge in demand because of its close proximity to Toronto and its highly-rated schools, says RE/MAX.
The City of Vancouver’s luxury market saw a different story unfold in the first seven months of the year.
Vancouver’s $1 million-plus single-family home sales dropped 32 per cent year-over-year, a direct result of the foreign-buyer tax in Greater Vancouver, says RE/MAX.
Housing Market News Alerts
Sign up now for news alerts on the Canadian housing market
The levy was implemented by the BC government in August 2016 to cool the region’s hot housing market.
“The foreign buyer tax [for Greater Vancouver] introduced last year — combined with a good selection of luxury single-family detached homes — reduced buyers’ sense of urgency in this segment of Vancouver’s market,” writes Elton Ash, RE/MAX’s Western Canada Executive Vice President, in a press release.
Although the City of Vancouver’s luxury detached home segment slowed down, sales of $1 million-plus condos saw an 11 per cent annual increase in the first seven months of the year.
With demand continuing to grow in the city’s luxury condo market, RE/MAX anticipates that more top-tier units will be entering the market in the coming years.
With a booming Canadian economy, Alexander says all Canadian markets observed in the report are forecast to continue their current trends for the remainder of the year.
“Our economic fundamentals in the country are very strong right now. We’ve got very low unemployment, especially in Ontario, very strong demand and it’s an international destination,” says Alexander.