Softer prices and lower interest rates spur renewed interest in high-end homes
Canadian luxury home markets are heating up after a slowdown, with sales increasing in most regions nationwide.
A new report from RE/MAX Canada attributes this resurgence to softer housing prices, downward-trending interest rates, and the end of quantitative tightening easing financial pressure for buyers.
The report found that 90% of luxury housing markets across the country experienced growth in high-end sales, led by Saskatoon with a 57% increase. Montreal followed with a 56% increase, and Calgary with a 52% increase.
Only Ottawa experienced a decline, with luxury sales dropping by almost 8% compared to last year.
“While figures remain off peak levels reported during COVID, the upswing in luxury sales signals a return to overall health in the country’s major centres,” RE/MAX Canada president Christopher Alexander (pictured) said in the report. “The ripple effect is already underway, with stronger home-buying activity at lower price points pushing sales into the upper end. In some cities where inventory levels are particularly challenging at the lower end, multiple offers have returned with a vengeance.”
While a disconnect remains between sellers holding out for peak pandemic prices and buyers seeking deals, the two sides are finding common ground in many cases, aided by ample high-end inventory in most markets.
Equity accumulated during robust home price appreciation periods is driving much of the luxury demand, according to Alexander. “Buyers who purchased in 2018 and 2019 are well positioned to make their next moves,” he explained, citing an example of 43% equity gains for 2018 buyers in Toronto by late 2023.
Read next: Younger Canadians giving up on homebuying aspirations: StatCan
RE/MAX also highlighted the emergence of a younger demographic entering the luxury market, with turnkey properties and suburban/rural estates in high demand. Some buyers are even purchasing in relatively more affordable markets like London, Halifax and the Prairies to maximize their purchasing power.
However, the federal foreign buyer ban implemented in 2023 has dramatically impacted the ultra-luxury segment in Vancouver, Toronto and Montreal’s condo market.
“While the idea of a Foreign Buyer Ban sounds good in principle, it makes less sense in practice,” Alexander stated, arguing the Bank of Canada’s rate hikes achieved the intended housing market cooldown.
Looking ahead, the report projects climbing momentum for luxury sales if economic fundamentals hold, buoyed by lower-than-expected inflation and the prospect of further interest rate relief. But caution still prevails given the recent housing market turbulence.
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