Although luxury sales over $1 million dropped in 2017, top-tier sales are expected to improve this year, says Sotheby’s International Realty Canada.
Overall, $1 million-plus residential sales (including condos, attached and single-family homes) in Vancouver were relatively stable in 2017, recording a 5 per cent drop compared to 2016, according to Sotheby’s Canada’s 2017 Top-Tier Real Estate Report.
However, for 2018 President and CEO Brad Henderson forecasts that it will be a more “normal” year.
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“Whilst there was a 5 per cent reduction overall in all three of those property types, what we’re saying is that we’re seeing continued strength of the condominium market, continued strength in the attached market and a recovery coming in the single-family home market,” Henderson tells BuzzBuzzNews.
Henderson predicts a growth in sales as the effects of Metro Vancouver’s foreign-buyer tax have effectively worn off, and that the market will adjust to the various federal policies in place, including a new stress test by the Office of Superintendents for Financial Institutions (OSFI).
The Sotheby’s report is a bi-annual study that highlights market trends for condos, attached homes and single-family homes, with values over $1 million to $4 million-plus, in Canada’s largest urban centres — the Greater Toronto Area (GTA), Vancouver, Calgary and Montreal.
Last year, Vancouver’s luxury condo market continued to outperform all other residential real estate segments.
A total of 1,285 condos over $1 million sold in the city in 2017, up 27 per cent compared to 2016.
According to the report, the top-tier condo market continued to be in demand, despite cooling measures introduced in 2016 by the provincial and federal government, including Metro Vancouver’s 15 per cent foreign-buyer tax.
In addition, Sotheby’s says many locals opted for condos as a result of being priced out of the detached market, which in turn caused increased competition, price spikes and a supply shortage.
Vancouver’s top-tier condo market did particularly well in the latter half of 2017, which saw a 67 per cent lift in $1 million-plus sales compared to the second half of 2016.
Henderson says consumer confidence grew in the final half of 2017 after the effects of the foreign-buyer tax began to wane.
“There was an initial shock when the foreign-buyer tax was put in the summer of 2016, and certainly coming into 2017, people were feeling more confident that the underlying fundamentals in the Vancouver marketplace were stable,” says Henderson.
“And that’s a primary reason why we believe that the condominium market responded fast and furthest,” he adds.
Conversely, single-family home sales above $1 million eased in 2017 with a 20 per cent year-over-year decline to 2,307 units.
Henderson says the decline can be attributed to a disconnect between buyers and sellers.
“Buyers are looking for prices to reduce and sellers were thinking that prices were either going to stay stable or move higher. So, when you have that kind of a mismatch you have a bit of a stalemate between the buyer and the seller,” says Henderson.
The most significant decline in the city’s luxury single-family home market last year was in the $4 million-plus segment where sales fell 35 per cent from 2016.