Despite a slowing economy, declining mortgage rates continue to support the luxury market
Canada’s luxury housing market is continuing to shift in favour of those looking to buy high-end properties, particularly in Toronto and Vancouver.
The luxury housing market managed to maintain steady sales activity in the third quarter of 2024, despite the pressures of a slowing economy and rising geopolitical tensions. According to Sotheby’s International Realty’s latest report, declining mortgage rates and population growth helped prop up the market, even as consumer confidence wavered.
One notable shift this quarter was the advantage luxury homebuyers gained in Toronto and Vancouver. Typically among Canada’s most competitive markets, both cities are now offering more favourable conditions for interested buyers, as a greater supply of high-end condos has helped stabilize prices.
“This fall, homebuyers and investors are set to encounter some of the most favourable conditions in years for purchasing or upgrading their homes as top-tier property listings supply increases, interest rates decline, and housing prices stabilize or even decrease in certain communities,” said Sotheby’s president and CEO Don Kottick.
“This trend is especially evident in the once fiercely competitive markets of Vancouver and Toronto, as well as across the luxury condominium sector.”
In Toronto, the luxury market held steady during the summer months, with $4 million-plus sales across all property types rising 3% year over year between July and August 2024. Single-family home sales in this range saw a modest 4% increase, while luxury condo sales over $4 million dropped by 25%, signalling a cooling in the high-end condo market. However, by September, luxury sales in the GTA picked up, with $4 million-plus sales growing by 9% compared to the previous year.
Vancouver’s luxury market told a slightly different story. Between July and August, luxury home sales over $4 million were down 13% from the same period in 2023, with single-family home sales falling 16%. Consumer confidence in Vancouver has been rattled by high housing prices and uncertainty surrounding the upcoming provincial election, and these factors contributed to a significant 52% drop in luxury sales in September. Still, the report noted that seven luxury condos over $4 million were sold during the summer, up slightly from last year’s six.
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While Toronto and Vancouver’s markets adjusted, Montreal and Calgary saw more positive trends. In Montreal, luxury real estate activity picked up, with a 15% year-over-year rise in $1 million-plus sales between July and August. September data reflected an even sharper increase, with sales jumping 83% year-over-year in the $1 million-plus segment, showing a healthy appetite for luxury properties across all housing types.
Calgary, driven by strong population growth and increasing demand, saw a 31% year-over-year rise in $1 million-plus sales during the third quarter. The city’s luxury market has been consistently outpacing other Canadian cities, and September maintained that momentum with two properties sold over $4 million, compared to none in September 2023.
According to the report, the luxury real estate market has taken time to fully absorb the impact of interest rate cuts, which have been gradually boosting buyer confidence.
While the luxury market remained stable, Kottick said population growth and rising construction costs could reignite competitive pressure in the future.
“Although we expect the luxury market to remain largely stable in the coming months, over the longer term, there is no doubt that population growth will intensify competition for housing,” he added. “Further, rising building costs and ongoing bureaucratic and policy barriers will only discourage construction.
“This means that there is an opportunity to take advantage of the favourable homebuying conditions we are seeing today.”
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