New Sotheby's report outlines market highs and lows in 2022
In the wake of “exorbitant hyperinflation” in Canadian luxury real estate, new post-pandemic benchmarks were established in 2022 as the market continues to evolve amid multiple pressures, according to Sotheby’s International Realty Canada.
“Against a backdrop of mounting economic uncertainty, steep interest rate hikes, escalating inflation, a stubborn deficit of housing inventory and sweeping housing taxation and regulatory changes, prospective luxury real estate sellers and buyers withdrew strategically from the market in anticipation of greater opportunity in 2023,” Sotheby’s said in its latest wide-ranging report.
Residential real estate transactions valued at $4 million decelerated by 24% annually, while ultra-luxury sales over $10 million declined by 29%, Sotheby’s said. Overall sales valued at $1 million and above fell by 28%, “despite underlying demand for top-tier housing and housing mobility.”
The slowdown was mainly due to the sharp decline in activity seen in the Vancouver luxury market, which saw residential sales valued at $4 million and $10 million fall by 30% and 46% annually, respectively.
“Vancouver’s luxury real estate market experienced a sharp decline in sales activity following the first quarter of the year as prospective buyers, frustrated by an era of heated market conditions, paused in anticipation of more favourable opportunities ahead,” Sotheby’s said.
The Montreal luxury market returned to a semblance of balance over the course of 2022, with sales valued at $4 million nearly on par with 2021 levels (up by just 2% annually).
At the other end of the spectrum, the Calgary luxury market benefited from strengthening economic fundamentals, with sales valued at $4 million spiking by 50%.
“The [Canadian] market is now on the verge of another important adjustment, this time in terms of pricing,” said Don Kottick, president and CEO of Sotheby’s International Realty Canada. “It has taken several months for home sellers to realize the impact of the changing market on the market values of their properties. As new property listings come on to the market in 2023, their pricing will shift to meet current realities. This will start to unlock long-awaited opportunities for buyers and upsizers to purchase homes that meet their lifestyle needs as they acclimatize to the market.”
