While the Greater Toronto Area’s luxury real estate market continued to attract buyers sales were down more than 30% when compared to last year a new report showed.
According to Sotheby’s International Realty Canada’s Top-Tier Real Estate: 2023 Mid-Year State of Luxury Report, overall the Greater Toronto Area (Durham, Halton, Peel, Toronto and York) saw residential real estate sales over $4 million contract 35% year-over-year from the first half of 2022, with seven properties sold over $10 million on MLS, compared to 16 residences sold above this price point in the same period last year. GTA residential sales over $1 million saw an annual decline of 29% in the first half of 2023.
Overall residential real estate sales over $4 million were down 32% year-over-year in Toronto, while five properties sold over $10 million on MLS, down from the seven properties sold above this price point in the first half of 2022. $1 million-plus sales in the City of Toronto were down 27% overall.
In comparison, Vancouver’s luxury residential sales (condominiums, attached and single family homes) over $4 million were down 18% from the same period in 2022, while ultra-luxury sales over $10 million on Multiple Listings Service (MLS®) climbed 38%. Residential sales over $1 million were down 25% year-over-year overall in the first half of 2023.
Similarly sales activity in Montreal’s luxury real estate market pulled back by 39% compared to levels seen in the first half of 2022, while residential sales over $1 million experienced a 28% annual decline.
“The Canadian luxury housing market has remained remarkably resilient despite the headwinds of multiple interest rate hikes and unpredictable economic performance, and the second quarter of 2023 marked a turnaround point for consumer activity. Following a year-long period of reconsideration and recalibration, qualified and highly motivated real estate buyers and sellers emerged from the sidelines over the spring, driving a bounce back in luxury market activity,” said Don Kottick, President and CEO, Sotheby’s International Realty Canada. “At the same time, Canadian luxury market performance has started to diverge, at times unpredictably, between major cities, neighbourhoods and housing types. Vancouver and Toronto’s urban luxury single family home markets experienced some of the most pronounced improvements in spring activity; however, inadequate supply continued to frustrate potential sales and to undermine the housing needs of locals.”
In contrast, consumer sentiment in Calgary remained consistently upbeat. Overall residential real estate sales over $1 million and $4 million were down a nominal 10% and 20% in the first half of the year, respectively. During this time, however, the city’s luxury condominium market rebounded, as $1 million-plus sales doubled with a significant 100% gain from 2022 levels.
“Over the past few years, Calgary has emerged as one of Canada’s most upbeat luxury real estate markets, and in the first half of 2023, its condominium market surpassed expectations with annual percentage sales gains that outstripped other major cities’ performance. In contrast, Montreal’s luxury market is rebalancing to accommodate negotiation and conditions that skew in favour of buyers, particularly in the city’s condominium segment,” Kottick added.
According to Kottick, the gap in consumer behaviour and activity in the luxury housing market, and that within the market for conventional properties, has widened significantly since the Bank of Canada started raising its policy interest rate in March 2022, with its most recent quarter-point hike bringing the rate up to 5.00% on July 12. With greater financial means to anticipate and adapt to rising mortgage rates, prospective luxury buyers have steadily adjusted their real estate strategy and are now re-engaging in personal property searches and strategic investment opportunities with readiness. In contrast, escalating mortgage carrying costs, stubbornly high property prices, sticky inflation, as well as concerns of a recession have had a more persistent impact on conventional buyers in the market. A larger segment of this latter cohort remains on the sidelines awaiting greater certainty and more favourable market conditions, a strategy that Sotheby’s International Realty Canada experts flag as posing considerable risks given the current unpredictability of the housing market.
